Archive · 29 Sep 2025
NRI Share Sale: Reinvestment Exemptions and Rules Explained
If you are an NRI who sells shares in India and wants to avoid paying capital gains taxes, there are some rules you must follow.
You might be able to avoid taxes if you bought the shares using money from an NRE or similar account, sell those shares, and then use the money to buy more shares within six months.
However, you must keep the new shares for at least three years.
If you follow these rules, you might not need to file an income tax return in India, as long as your only income is from the long-term capital gains.
Capital gains from selling listed shares held over a year are generally taxed at 12.5%.
NRIs and PIOs may be eligible for capital gains tax exemption if they reinvest the proceeds.
Exemption applies to shares of Indian companies acquired with convertible foreign exchange.
Reinvestment must occur within six months of the share sale.
Reinvested assets must be held for a minimum of three years to maintain the exemption.
- Who
- Non-resident Indians (NRIs) and Persons of Indian Origin (PIOs)
- What
- Are eligible for capital gains tax exemption on the sale of shares if reinvested under specific conditions.
- When
- Applicable when shares are sold and the proceeds are reinvested.
- Where
- India
- Why
- To incentivize investment by NRIs and PIOs in India.
- Applicable Tax
- LTCG at 12.5% on equity shares held over 12 months.
- Eligibility
- NRIs and PIOs investing through convertible foreign exchange.
- Eligible Assets
- Shares of Indian companies acquired via convertible foreign exchange
- Reinvestment Timeline
- Must reinvest net sale proceeds within six months.
- Holding Period
- Reinvested assets must be held for at least three years.
- Tax Filing (LTCG)
- Not mandatory if TDS is deducted and only income is LTCG from specified assets.
