What are the tax implications for me?

What are the tax implications for me?

Taxes on capital gains:

You will be taxed in India for this gain. You will not be taxed in the US. The amount of taxes you have to pay in India depends on how long you hold the investment
  1. To qualify as a long term capital asset, the shares must be held for at least 24 months. The gain will then be taxed at a long term capital gains tax rate of 20% (plus applicable surcharge and cess fees), with indexation benefits.
  2. If you hold the shares for less than 24 months, the gain qualifies as short-term capital gain and will be taxed as normal income in India. The tax rate is based on the tax bracket that you fall under, according to your income
Taxes on dividends:

Unlike investment gains, dividends will be taxed in the US at a flat rate of 25%. For example, if Microsoft gives an investor $100 as dividend, $25 will be withheld as tax. Subsequently, this post-tax dividend is included as taxable income in India (as normal income).
Fortunately, the US and India have a Double Taxation Avoidance Agreement (DTAA), which allows taxpayers to offset income tax already paid in the US. The 25% tax you already paid in the US is made available as Foreign Tax Credit and can be used to offset your income tax payable in India.
 
At the end of fiscal year, we will send you a consolidated statement of your transactions, capital gains and dividend that will help you simplify the tax process.


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