Current rules also allow some former Indian residents to disclose previously unreported US investments under FAST-DS 2026
For Non-Resident Indians (NRIs), the tax treatment of investments can change significantly depending on where income or gains arise and their residential status in India. Two recent tax queries highlight the implications for NRIs holding foreign and Indian equities.
An Indian citizen living in the UK, who became a non-resident in 2017, incurred losses on UK shares while making gains from the sale of Indian stocks. The question was whether the UK losses could be adjusted against the Indian capital gains in the Indian tax return.
Under the Income-tax Act, 2025, a person qualifying as a non-resident for the financial year 2026-27 is generally taxed in India on income received or deemed to be received in India, or income that accrues or arises in India.
As a result, gains or losses from the sale of UK shares by an Indian non-resident would generally fall outside India’s tax net. Since the foreign loss is not part of taxable income in India, it cannot be set off against capital gains arising from the sale of Indian shares.
A separate issue concerns NRIs who previously lived in India and acquired foreign assets before becoming non-residents.
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Under the Foreign Assets of Small Taxpayer Disclosure Scheme 2026 (FAST-DS), a person who is currently a non-resident or Resident but Not Ordinarily Resident (RNOR) may still qualify if they were resident in India when the undisclosed foreign income was earned or the foreign asset was acquired
This means an individual who moved to Singapore in 2024 but had acquired US shares while resident in India could potentially use FAST-DS 2026 to disclose those holdings. Where the foreign stocks were not reported in Schedule FA, a fixed fee of Rs 1 lakh would apply under the scheme.
The cases underline the importance of determining residential status and the source of income before filing an Indian tax return.
This article is for general information and should not be treated as tax advice.
