How capital gains on foreign shares are taxed for returning Indians

Returning residents who sell US-listed shares face a tax calculation that starts in dollars, not rupees. The conversion rate is fixed to the last day of the month before the sale, not the date of purchase or the sale date itself, according to the Income Tax Act 2025.

The rule applies regardless of whether the proceeds stay abroad. Capital gains are computed first in the foreign currency of the transaction – dollars, in this case – using the sale price, the original cost, and any expenses. That dollar gain is then converted to rupees at the State Bank of India Telegraphic Transfer buying rate prevailing on the last day of the month immediately preceding the month of sale. For a sale in August 2026, the rate would be the SBI TT buying rate as of July 31, 2026.

There is no separate relief for the rupee depreciation that may have occurred between the purchase and the sale. The tax code does not provide a mechanism to adjust the cost basis for currency moves. The gain is the full dollar gain, converted at the fixed rate, and taxed accordingly.