Yes...capital gains on Shares,which are listed abroad, are liable for Capital Gains Taxation. Note that it is taxable @ 20% + surcharge + cess (depending on the tax bracket u are in.........if ur income is Rs. 10 lakhs +, then it is 22.44% else 20.40%) & not at 10% (since not listed in India but in USA). I presume that the holding period is more than a year, else it will become a short term capital gain & taxable @ 33.66%. Indexation is available & yes u can defnitely get exemption from tax by investing in an apartment (Sec 54 F of the Income Tax Act) if u are not owning more than 1 house (before the proposed buy) on the date of sale.
Capital Gains Tax - What Is the Capital Gains Tax?
A capital gain is income derived from the sale of an investment. A capital investment can be a home, a farm, a ranch, a family business, or a work of art, for instance. In most years slightly less than half of taxable capital gains are realized on the sale of corporate stock. The capital gain is the difference between the money received from selling the asset and the price paid for it.
"Capital gains" tax is really a misnomer. It would be more appropriate to call it the "capital formation" tax. It is a tax penalty imposed on productivity, investment, and capital accumulation.
The capital gains tax is different from almost all other forms of taxation in that it is a voluntary tax. Since the tax is paid only when an asset is sold, taxpayers can legally avoid payment by holding on to their assets--a phenomenon known as the "lock-in effect."
There are many unfairnesses imbedded in the current tax treatment of capital gains. One is that capital gains are not indexed for inflation: the seller pays tax not only on the real gain in purchasing power but also on the illusory gain attributable to inflation. The inflation penalty is one reason that, historically, capital gains have been taxed at lower rates than ordinary income. In fact, "most capital gains were not gains of real purchasing power at all, but simply represented the maintenance of principal in an inflationary world."
Another unfairness of the tax is that individuals are permitted to deduct only a portion of the capital losses that they incur, whereas they must pay taxes on all of the gains. That introduces an unfriendly bias in the tax code against risk taking. When taxpayers undertake risky investments, the government taxes fully any gain that they realize if the investment has a positive return. But the government allows only partial tax deduction if the venture goes sour and results in a loss.
There is one other large inequity of the capital gains tax. It represents a form of double taxation on capital formation. This is how economists Victor Canto and Harvey Hirschorn explain the situation:
A government can choose to tax either the value of an asset or its yield, but it should not tax both. Capital gains are literally the appreciation in the value of an existing asset. Any appreciation reflects merely an increase in the after-tax rateof return on the asset. The taxes implicit in the asset's after-tax earnings are already fully reflected in the asset's price or change in price. Any additional tax is strictly double taxation.
Take, for example, the capital gains tax paid on a pharmaceutical stock. The value of that stock is based on the discounted present value of all of the future proceeds of the company. If the company is expected to earn Rs.100,000 a year for the next 20 years, the sales price of the stock will reflect those returns. The "gain" that the seller realizes from the sale of the stock will reflect those future returns and thus the seller will pay capital gains tax on the future stream of income. But the company's future Rs.100,000 annual returns will also be taxed when they are earned. So the Rs.100,000 in profits is taxed twice--when the owners sell their shares of stock and when the company actually earns the income. That is why many tax analysts argue that the most equitable rate of tax on capital gains is zero.
Exchange.
Currently, India has no exemptions for either short-term or long-term gains realised by selling shares, though there are proposals to abolish long-term capital gains tax.
Currently, the rates in India are next only to the US, which imposes a 39.6% short-term capital gains tax and a 20% long-term tax. In fact, our short-term capital gains tax of 31.5% (for the individual in the highest tax bracket) is even higher than that in Japan and France, where the maximum is 26%.
India’s long-term capital gains tax is 10%. Any holding of more than a year is considered long-term.
Of late, developed nations are taking active initiatives to reduce their capital gains tax. Australia has decided to cut its top marginal capital gains tax from 47% to 23.5% for assets held for a year. Germany also plans to eliminate capital gains taxes levied on stock sales by corporations.
The country has already done away with personal capital gains if the stocks have been held for more than 6 months. Japan is thinking of dropping the tax rate to 10% for shares held more than a year.
2006-11-12 22:53:08
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answer #1
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answered by Anonymous
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if you're making a decision in holding with an emotional reaction then that determination may nicely be incorrect and also you may want to finally end up dropping extra. This what many textbooks and primers on making an investment say. the following is what may likely take position in this state of affairs: enable's say Obama is elected. enable's say he does author and deliver such law. nicely previous adventure being a barometer he's likely to have stiff competition from conservative Republicans contained in the residing house and Senate. assume that by a chain of negotiations and concessions a clean tax code honestly contains bypass. nicely it nonetheless received't take position almost as quickly as this bailout. it would want to ought to bypass muster with the various particular interests which will foyer Congress adverse to it. And bear in mind that law is drafted and debated in committee. that is there that that is determined no matter if that is going to flow to the floor or no matter if that is going to by no potential see the gentle of day again. the single ingredient I see Obama likely to attempt to push by is a reduce on capital positive aspects tax cuts or he will oppose making tax cuts everlasting. you've two times reported that you're afraid. And that worry is honestly palpable on your inquiry. i might want to extremely hate to hearken to that you probably did something rash and for this reason missed an probability. Why do not you purely wait a lengthy time period provide your nerves a danger to kick back down and observe what honestly takes position.
2016-11-29 02:22:59
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answer #2
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answered by Anonymous
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Yes you have to pay tax on them. you can not escape it. You have to pay them sooner than the tax law enforment agents gets at you. then you pay more.
2006-11-12 19:41:23
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answer #3
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answered by Nnamsco 3
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there are plenty of counters opened for free guidance rather precise
2006-11-12 19:40:07
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answer #4
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answered by david j 5
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