Taxation on US Equity, MFs and ETFs, Listed on US Exchanges

Income Tax Income from Capital Gains
1

Hello Everyone,

I am a resident in India. Suppose I have been vested or bought some US stocks on March 7, 2025, given I have already filed the W-8 BEN form, then, may I know the below:

  1. What is the current long-term period on US Equity and US ETFs listed on NASDAQ/NYSE - 1, 2, or 3 years?

  2. What will be the taxation: short-term and long- term capital gains on US Equity and ETFs (listed in US, purchased on or after Mar 7, 2025)?

  3. Can long-term capital loss on US stocks or ETFs (listed in US) be adjusted with long-term capital gains on Indian stocks, mutual funds & ETFs (listed in India i.e., listed on NSE/BSE) in the same F.Y.? Similarly for short-term CG?

  4. Can long-term capital loss on US stocks or ETFs (listed in US) be carried forward to adjust with US stocks or ETFs, if yes, then for how many years? Similarly for short-term CG?

  5. Can long-term capital loss on US stocks or ETFs (listed in US) be carried forward to adjust with Indian (i.e., listed on NSE, BSE) Stocks, mutual funds or ETFs, for the next 8 F.Y. (just like in India)? Similarly, for short-term CG?

  6. Further, what is the long-term and short-term period, taxation and loss carry-forward rules for US ETFs listed in India - e.g., MON100 and MAFANG?

  7. If we transfer funds to US broker to buy stocks, then in AIS/TIS it is reported something like foreign remittance… do we need to do anything in our ITR, if we are not selling those stocks? Similarly, if we purchase something from US online/offline (say chocolates, toys etc.) for ourselves?

Looking forward to the response by the community!

Regards,
AG

2

Hey @AG_125

Let me address your queries one by one:

  1. Capital Gains on US Investments:
  • For US ETFs purchased on or after March 7, 2025, the gains will be treated as short-term capital gains, regardless of the holding period, and will be taxed at your applicable slab rate.
  • For US equities, if held for more than two years, the gains will be classified as long-term capital gains and taxed at 12.5%. If held for two years or less, they will be treated as short-term capital gains and taxed at slab rates.
  1. Set-Off and Carry-Forward of Capital Losses:
  • Long-term capital losses can be set off against any long-term capital gains, including gains from Indian stocks, mutual funds, and ETFs.
  • Short-term capital losses can be set off against both short-term and long-term capital gains.
  • Both types of losses can be carried forward for up to 8 assessment years, provided they are reported in the return filed within the due date.
  1. Taxation of US ETFs Listed in India
  • US ETFs listed in India, if held for more than one year, will be classified as long-term capital assets and taxed at 12.5%. If held for one year or less, they will be treated as short-term and taxed at the applicable slab rate.
  1. Reporting in ITR for Unsold Investments or Personal Purchases:
  • If you hold any foreign stocks, you are required to report them in your ITR under Schedule FA. The details of these foreign stocks must be disclosed as they stand on 31st December of the relevant financial year.
  • Personal purchases from abroad such as chocolates or toys - do not need to be reported in your ITR.

Hope this helps!