What are the tax implications of investing in Indian equities?
Tax rates on investments gains are categorized as long term & short-term capital gains. (a) Long term capital gains Long Term investments that are held for more than 12 months are termed as long-term capital assets. Profit on sale of such assets is termed as long-term capital gain (LTCG). In case you have purchased these shares out of NRE/FCNR accounts through direct remittance from abroad, LTCG is to be computed in terms of the foreign currency from which the shares were purchased. This allows you to take advantage of rupee depreciation while calculating LTCG. Tax on LTCG in this case is 10%. In this case, benefit of indexation is not allowed. In case you have purchased the shares on basis of an NRO account, you can take the benefit of indexation and compute the LTCG. The tax on such gains is levied at 20%. You also have an option to pay LTCG at 10% without the benefit of indexation. This is quite useful in case of bonus shares. (b) Short term capital gains Shares that are held for le
