Does change in Forex rate amount to Capital gains on foreign assets?

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  1. TaxPayer123

    TaxPayer123 Member

    I worked in the US for sometime and had a savings of 5000 USD which I kept in a checking (non-interest bearing) account in USA. All taxes on income which lead to the savings have already been paid in previous years. No interest has accrued on the savings.

    I have now closed the foreign account (FY 2016-17) and transferred that money to my Indian account. Is there a case for any kind of capital gains here? Is this money liable to any other kind of taxation?

    Thanks in advance!



    Firstly - have you paid taxes on the same in the foreign country and filed the necessary returns while you had earned that income? Also, were you a 'Non-resident' within the definition of the Indian Income-tax Act while this income was earned? If yes then this is not taxable.

    Income tax Act requires that even if you are earning the income outside India, but you were a "Resident in India" as per the Income tax Act (calculated based on the number of days of stay in India) during that period, you are required to pay taxes in India. However, if you were a "Non-resident" in India as per the Income tax Act and the source of income was outside India, and also received outside India, then no tax will be levied on the income earned outside India in India. However, the foreign country would have charged you tax on the income earned in their country.

    Therefore, if you are a non-resident as per the Income-tax Act, income was earned abroad, and taxes were paid abroad (and necessary returns filed) then mere repatriation of funds would not attract tax whether in SBI account or any other account account be it NRO/ NRE etc. You should have proof of payment of your income taxes on the income earned.
  3. TaxPayer123

    TaxPayer123 Member

    Thanks for the revert.

    I paid taxes on that income in US. However, I was 'ordinarily resident' in India from an IT perspective & I filed my returns in India (including the foreign income) and availed foreign tax credit under DTAA.

    Now, if I move those funds back to India, are they liable to be taxed in any way? eg. the value in INR would change on account of Forex Rate fluctuations.


    Not liable for taxation again - When you have already paid tax in foreign and already shown in your indian income tax return also.
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