How taxes will work for investors in India when investing in the US
Tax on investment gains:
- To qualify as a long term capital asset, the period of holding in case of shares of a foreign company is over 24 months. Thus if you hold the investment for longer than 24 months → the gain will be taxed at a long term capital gains tax rate of 20% (plus the applicable surcharges and cess fees).
- Whereas, if you hold the investment for less than 24 months → the gain qualifies as short-term capital gains and will be taxed as normal income in India. For example, if you buy one Google stock at a share price of $1000 and you sell your share less than 24 months later for $1100, you will be taxed in India for the $100 gain you have made. Taxation is based on the tax bracket that you fall under according to your income level.
Tax on dividend: