An NRI can repatriate up to $1 million per fiscal year

I am a non-resident Indian (NRI) and I have been holding some shares of companies listed on the Indian stock exchange since more than five years. I acquired all these shares from income earned in India. At the moment, I am a permanent resident of Singapore and I will be applying for citizenship very soon. Will this move have any tax implication on my stock holdings? Will income-tax implications on gains made on my selling these shares change? Can I repatriate the gains I earn from selling the shares to Singapore?

—Sahil Shukla

Under the Indian tax laws, an NRI is a non-resident individual who is either a citizen of India or a person of Indian origin. A person is considered to be of Indian origin if he, either of his parents or any of his grandparents, was born in undivided India.

Under the foreign exchange regulations, an NRI is a person resident outside India who is either a citizen of India or is a person of Indian origin. A person of Indian origin is a citizen of any country other than Bangladesh or Pakistan, if he at any time held an Indian passport or he or either of his parents or any of his grandparents was a citizen of India or if he is a spouse of any of the above individuals.

Therefore, even after obtaining citizenship of Singapore, you will continue to be an NRI both under the Indian tax laws and even under the foreign exchange regulations. There will not be any tax implication on your stock holdings.

Under the Indian tax laws, capital gains on sale of shares sold through a recognized stock exchange are exempt from income tax in case they are held for a period exceeding 12 months. In your case, since all the shares have been held for a period exceeding 12 months, the capital gains derived from the sale of the said shares will not be taxable in India if you sell the same through a recognized stock exchange.

Though direct repatriation of sales proceeds of shares acquired from income earned in India is not permitted, as an NRI, you can repatriate up to $1 million per financial year out of the balances held in the non-resident ordinary (NRO) accounts after you have paid due taxes. The sales proceeds will first be credited to your NRO account and can be repatriated thereafter. For this purpose, you will need to obtain a chartered accountant’s certificate, certifying that due taxes have been paid and submit the same to the authorized dealer for remitting the funds to Singapore.

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