What are the tax implications of Standard Chartered IDR Indian Depository Receipts?
This is where the IDR differs from a common Indian Stock. The other Indian Stocks have two categories – Short Term Capital gains tax at 15% and Long Term Capital Gains tax at 0%. However, IDR may not get this lower tax benefit. It might be taxed at 20% for long term capital gains tax and 30% on Short Term Capital Gains Tax. Moreover, the dividend, if declared by any IDR issue, will also be taxed for dividend distribution tax. Hence, all these factors related to big tax rates may force traders and market makers to stay away from opting for IDR issues and even trading in these IDR securities. That might hit the trading volume of IDR, as compared to other common stocks. The same may be felt by the other investors. So the investors need to be careful about these Risks associated with IDR.
