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Feb 21, 2025
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Income Tax Bill 2025 offers forex adjustments for non-residents on unlisted shares
The Income Tax Bill 2025 introduces key amendments addressing foreign exchange fluctuations in capital gains taxation for non-resident investors, a move expected to reduce tax burdens and enhance market participation, tax experts said.
A major shift under the Financial Bill 2025 allows non-residents to adjust acquisition costs based on currency fluctuations when computing capital gains tax on unlisted shares and stocks purchased in foreign currency.
“The introduction of the ‘Variation in Liability’ provision under Section 42 enables non-residents to offset forex fluctuations, ensuring a more accurate tax assessment,” said Prithiviraj Senthil Nathan, partner at King Stubb & Kasiva.
Previously, non-resident investors were taxed on long-term capital gains from unlisted securities at 12.5 per cent without any forex adjustment benefits.
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