Capital
Gains
Special
provisions for a non resident
The
Income Tax Act lays down certain conditions in the cases of non
resident who are not covered by section 115AC and section 115AD
of the Act. These conditions are enumerated below .
a)
in the case where a non resident acquires shares in or debentures
of an Indian Company in foreign currency, the cost of acquisition,
the expenditure incurred wholly and exclusively in connection with
the transfer of such assets and the full value of the consideration
received or accruing as a result of the transfer of the capital
asset shall be computed by converting the expenses in the same foreign
currency as was initially utilised to acquire the shares or debentures.
Thereafter the capital gains shall be computed in the foreign currency
and reconverted into Indian currency. This procedure provides a
protection against the fluctuation in the currency market of the
Indian rupee and protects the interests of the non resident.
b)
in the case of a non resident where the long term capital gains
are in respect of the assets mentioned above, no indexation of cost
of acquisition or of the cost of improvement is permissible.
For
the purposes of conversion of the cost of acquisition , the expenditure
incurred for transfer , the full value of the consideration received
and the capital gains , the rate of exchange to be adopted shall
be the average of the telegraphic transfer buying rate and the telegraphic
transfer selling rate adopted by the State Bank of India on the
specified dates in respect of the said foreign currency.
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