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Capital losses from USA

Sunder (Manager) (95 Points)

23 December 2009

Friends,

Please consider this situation:

USCitizen has returned to India and RNOR period is over and the status is "Resident" for India tax purposes. Following questions are When he sells stocksbought in USA 5 years back and that results in Long term Capital loss:

1. Can he offset Long term capital gains of India using losses of sale from US?

2. Does this transaction needs to be declared in both US and Indian returns?

Any of you thought through above situation, can you please point to references?

Thank You

Sunder

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Amir (Learner) (4016 Points)
Replied 24 December 2009

Dear Sunder,

As per Sec 5, for determining SCOPE OF INCOME The Residentail Status of the YEAR in which losses (in US) were incurred is relevant if in that year he was

1) ROR - then losses can be setoff against Indian Gains provided they were carried forward in the return filed in due date as per law.

2) RNOR / NR - then losses cannot be setoff EXCEPT on satisfaction of BOTH the following 2 conditions

a) The Consideration was received in India by the assesse or on his behalf.

b) The losses were carried forward as per law .

As far as declaration of Transanction in Indian Income Tax Act is concerned if the income (or loss) is coming under Sec 5 then it has to be disclosed.

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