Guides / Capital gains
LTCG on foreign shares in India
If you sell US or other foreign shares after holding them for more than 24 months, the profit is a long-term capital gain taxed at 12.5% (plus 4% cess). This guide shows how to count the 24 months, which rate applies, and how to work out the tax in rupees.
At a glance
Applies to FY 2025-26 (AY 2026-27) · Last updated
| Long-term if held | More than 24 months (exactly 24 months is still short-term) |
|---|---|
| LTCG rate | 12.5% without indexation for sales on or after 23 July 2024, plus 4% cess |
| Before 23 July 2024 | 20% with indexation (plus 4% cess) |
| Section | Section 112. Foreign shares are unlisted in India, so Section 112A does not apply |
| Exemption | None. The ₹1.25 lakh exemption is only for listed Indian shares under 112A |
| Short-term gains | Added to your income and taxed at your slab rate |
The 24-month test
Shares of a foreign company are unlisted in India. For unlisted shares, a gain is long-term only if you held them for more than 24 months. The days run from the date you bought to the date you sold.
Example: you buy on 15 January 2024. A sale on 15 January 2026 is exactly 24 months, so it is short-term. A sale on 16 January 2026 is long-term. Selling one day earlier or later can change the rate a lot, so check the date before you sell.
Which LTCG rate applies
The rate depends on the date of sale, not the date of purchase.
- Sold on or after 23 July 2024: 12.5% on the gain, with no indexation.
- Sold before 23 July 2024: 20% on the gain after indexing the purchase cost with the Cost Inflation Index.
- Cess: 4% Health and Education Cess is added on the tax. Surcharge for high incomes is not included in the examples here.
Worked example in rupees
You bought 100 shares at $50 when the SBI rate was ₹80, and sold them 30 months later at $100 when the rate was ₹86.
| Cost | 100 × $50 × ₹80 = ₹4,00,000 |
|---|---|
| Sale value | 100 × $100 × ₹86 = ₹8,60,000 |
| Gain | ₹8,60,000 − ₹4,00,000 = ₹4,60,000 |
| Tax at 12.5% | ₹57,500 |
| Cess at 4% | ₹2,300 |
| Total tax | ₹59,800 |
Part of this gain comes from the rupee falling against the dollar (₹80 to ₹86). It is not taxed separately. The whole gain in rupees is taxed as one number.
Which exchange rate to use
Convert the purchase cost with the SBI telegraphic transfer (TT) buying rate on the purchase date, and the sale value with the same rate on the sale date (Rule 115). Use the same source for both, and keep a note of the rates you used.
If you have a loss
A long-term loss can only be set off against other long-term gains. A short-term loss can be set off against both short-term and long-term gains. Any loss left over can be carried forward for 8 years, but only if you file your return on time.
Where it goes in your ITR
- File ITR-2 (or ITR-3 if you have business income). Report the sale in Schedule CG under long-term capital gains on unlisted shares, Section 112.
- Disclose the shares you hold in Schedule FA (foreign assets), which uses the calendar year.
- For dividends, see the dividend withholding tax guide.
Work out your own gain
The free calculator applies the 24-month test and the right rate for each sale.
This guide is general information, not tax advice. Rules change with each Budget, so confirm with a chartered accountant before you file.