How to Calculate Long-term Capital Gain Taxes

Long – term capital gain on sale or transfer for foreign exchange assets shall be calculated subject to the following points:
1. The benefit of indexation under second proviso to section 48 is not available in respect of sale or transfer of foreign exchange assets
2. No deduction is permissible in respect of Long – term capital gain under sections 80C to 80U.
3. By investing sale consideration in another asset, the non- resident Indian can claim exemption under section 115F

Tax on investment income and long-term capital gain – Non-resident Indian can chargeable to tax on investment income at the rate of 20 per cent* and long-term capital gain (as computed above) at the rate of 10 per cent.

Return of income not to be filed in certain cases – In cases where a non- resident Indian has income only from a foreign exchange asset or income by way of long-term capital gains arising on transfer of a foreign exchange asset, or both, and tax deductible at source from such income has been deducted, he is not required to file the return of income under section 139(1).
The income from foreign exchange assets and long-term capital gains arising on transfer of such assets would be treated as a separate block and charged to tax at a flat rate as explained above. If the non- resident Indian has other income in india, such other income is treated as an altogether separate block and charged to tax in accordance with the other provisions of the Act.

Benefit available even after the assessee becomes resident – Where a person, who is a non- resident Indian
in any previous year, becomes assessable as resident in India in any subsequent year, he may furnish to the Assessing officer a declaration in writing (along with his return of income under section 139 for the assessment year for which he is no assessable) to the effect that the special provisions shall continue to apply to him in relation to the investment income derived from any foreign exchange asset being debentures of and deposits with, an Indian public limited company and Central Government securities. If he does so, the special provisions shall continue to apply to him in relation to such income for that assessment year(and for every subsequent assessment year) until the transfer or conversion (othervise than by transfer ) into money of such assets.

Special provisions not to apply if the assessee so chooses – A non- resident Indian may opt that the special provisions relating to taxation of the investment income and long- term capital gains at a flat rate should not apply to him. This option is exercisable by a taxpayer by making a declaration to that effect in his return of income for the relevant assessment year. In cases where such an option is exercised by a non- resident Indian, the whole of his total income (including income from foreign exchange assets and long- term capital gains arising on transfer of a foreign exchange asset ) is charged to tax under the general provisions of the Income-tax Act.