This proviso is applicable to non-residents only.
The non-resident must have acquired shares or debentures of Indian companies using foreign currency.
Such non-resident, wanting to transfer such shares will follow the following considerations and conditions.
The asset may be short term or long term.
The capital gain from transfer of such asset shall be computed in the following manner
(i) Capital gain is computed in the same currency in which shares were acquired.
(ii) Sale consideration in Indian currency is converted into foreign currency at average exchange rate on the date of transfer.
(iii) Cost of acquisition in Indian currency is converted into foreign currency at average exchange rate on the date of acquisition.
(iv) Expenditure incurred in Indian currency on sale is converted into foreign currency at average exchange rate on the date of transfer.
(v) Out of sale consideration in foreign currency as per (ii) above cost of acquisition as per (iii) above and expenses on sale as per (iv) above are deducted.
(vi) Cost of acquisition of such shares and debentures is not to be indexed u/s 48.
(vii) Balance amount is capital gain which is reconverted into Indian currency at buying rate on the date of transfer.
(viii) “Average exchange rate”—It is the average of telegraphic transfer buying rate and telegraphic transfer selling rate of exchange adopted by the State Bank of India for purchasing or selling such currency through telegraphic transfer.