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May 30, 2025
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NRIs to pay lower LTCG tax on these equity shares due to proposed forex fluctuation benefit in New Income Tax Bill 2025
The New Income Tax Bill, 2025 has a provision with which non-residents Indians (excluding FIIs) can effectively pay a lower capital gains tax than allowed under the Income Tax Act, 1961. This provision is called ‘forex fluctuation benefit’ and using it NRIs can pay a lower long term capital gains tax (LTCG) on sale of unlisted equity shares of an Indian company.
As per calculations, if this beneficial provision in the new tax bill, 2025 is incorporated by the Indian government in the final act, then NRIs can pay as much as 72% lower long term capital gains tax when compared to before. The reason for this high percentage of savings in capital gains tax payment for NRIs is earlier under the old tax act of 1961, NRIs had to pay income tax on artificially high income due to depreciation of Indian Rupee (INR). This disadvantage is now removed and NRIs are only required to pay income tax on their actual gains in USD terms.
Read below to understand what the forex fluctuation benefit about which Income Tax Bill 2025 talks is about and how NRIs stand to gain from this benefit if the government implements it in the final income tax act.
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