Rajiv Kaicker (Service) 17 March 2017

Capital gain on shares of a foreign entity

An employee works for a Wholly Owned Indian Subsidiary of a Foreign Company. He is given Shares of the Foreign Parent Company under the ESOP Scheme.The perquisite value of these shares are included in his Total Income for the relevant Assessment Years for taxation purpose. On retirement from the Company,he sells these shares. Please advise the method of calculating the Capital Gain on the sale of the above mentioned Foreign Shares.

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Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer) 21 March 2017

Are the shares listed in any of the exchanges in India or abroad and are they being quoted? If so in which currency are they quoted? How were they sold, through a stock exchange or otherwise? It is presumed that the employee was employed and resident in India at the time the stock option was given to him. Also it is presumed that the employee was/is a permanent resident of India.

Rajiv Kaicker (Service) 21 March 2017

The Shares are quoted in CHF on stock exchanges in Switzerland.The employee has always been a Resident Indian.

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer) 21 March 2017

How were the shares sold?

Rajiv Kaicker (Service) 21 March 2017

Sold online through website EQUATEX.

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer) 25 March 2017

Take cost of the shares alloted as given in the income-tax returns for the year. Indexed cost of the shares = cost of the shares x index for the year in which it was sold / index for the year of acqyusition. Sale price = sale proceeds - cost incurred such as brockerge. Capital gain = Sale price - indexed cost of acquisition. You have to pay 20% of capital gain as tax.