Tax will be applicable at two stages:

1️⃣ Tax on Dividend

• When dividend is received from a foreign company.
• Note: Foreign companies usually deduct withholding taxes in their country. By taking the benefit of DTAA and Foreign Tax Credit (FTC) on taxes paid outside India, such dividend income shall be taxable in India.

2️⃣ Tax on Sale of Stocks

• When such investments are redeemed outside India, capital gain income is calculated. There are two types of gains:

  Short Term 📉

  • If you held the stocks for less than 24 months, they are treated as Short Term. They are taxed at income slab rates applicable.

  Long Term 📈

  • If you held the stocks for more than 24 months, they are treated as Long Term. They are taxed at 20% on such gain.