Neutral impactEconomy
NRI tax rules: What happens to losses on foreign shares?
Mint 53 min ago·5 Oct 2026, 2:50 pm
Non-Resident Indians (NRIs) and former residents often have complex investment portfolios across different jurisdictions. A common question arises regarding the tax treatment of losses incurred in foreign markets, such as the UK, and whether these can be used to offset gains from Indian equities. The taxability of these transactions depends on the specific tax residency status of the investor and the nature of the income, as tax laws in India generally do not permit the offsetting of foreign capital losses against domestic capital gains.
For NRIs, the tax treatment is governed by the Double Taxation Avoidance Agreement (DTAA) with the respective country. While the DTAA may allow for a set-off of losses against gains within the same country, it does not typically extend to offsetting losses from one country against gains from another. Consequently, an NRI cannot usually claim a deduction in India for a loss on UK stocks against a profit on Indian shares. Investors must pay tax on their global income as per the applicable rates in their country of residence.
Moving forward, investors should ensure they maintain accurate records of all international transactions. The government has introduced mechanisms like the FATCA and CRS to improve compliance and transparency. Former residents returning to India should be aware of the specific timelines and procedures, such as the FAST-DS, for disclosing foreign assets to avoid penalties. Staying updated on changes in tax treaties and reporting norms is crucial for managing cross-border investments effectively.
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- Category: Economy.
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