{"id":373415,"date":"2024-03-09T16:44:31","date_gmt":"2024-03-09T11:14:31","guid":{"rendered":"https:\/\/zerodha.com\/z-connect\/?p=373415"},"modified":"2024-04-09T16:27:58","modified_gmt":"2024-04-09T10:57:58","slug":"can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs","status":"publish","type":"post","link":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs","title":{"rendered":"Can I claim Sec 54F tax benefit on selling foreign shares or ETFs?"},"content":{"rendered":"

Yes. Indian taxpayers can avail of the tax exemption under section 54F of the Income-tax Act against gains earned from selling foreign shares or ETFs if the money is utilised to buy or build a new residential house, provided the house is located in India. This means they won’t have to pay capital gain tax on their income from selling those foreign shares or ETFs.<\/p>\n

Here’s what they need to keep in mind:<\/p>\n

Time Held<\/strong><\/h2>\n

Taxpayers must ensure that the holding period of the assets being transferred qualifies as long-term. Listed shares in India qualify as long-term capital assets if held for over 12 months. However, the criteria differ slightly for listed foreign shares or ETFs. Listed foreign shares qualify as long-term capital assets if held for over 24 months. Moreover, you may also get the benefit of cost indexation that adjusts the purchase cost for inflation.<\/p>\n

As for ETFs, the holding period to qualify as long-term depends on the underlying security, whether it’s equity or debt. Equity ETFs qualify as long-term if held for more than 12 months, while debt ETFs require a holding period of over 36 months or three years.<\/p>\n

But now this has changed. As per section 50AA, if the fund has less than 35% exposure to Indian<\/strong> equity, it will be deemed a short-term capital asset and taxed accordingly, no matter how long you hold it. The capital gains will be charged to tax at your slab rate.<\/p>\n

This treatment under Section 50AA applies to mutual funds and ETFs acquired after April 1, 2023.<\/p>\n

Interestingly, this rule also seems to have inadvertently affected international equity ETFs since they have less than 35% exposure to Indian or domestic equities. Hence, pure international funds that invest only in foreign securities will also be taxed as short-term capital assets.<\/p>\n

We hope the tax department clarifies these unintended consequences, especially regarding how funds holding foreign stocks are taxed, and investors should keep an eye out for these clarifications.<\/p>\n

Buying a Home<\/strong><\/h2>\n

To claim the tax benefit under section 54F, the taxpayer must use the money earned from selling the shares or ETFs to buy a new residential house. Only long-term capital gains are allowed under this section.<\/p>\n

The residential house must be located in India and purchased within two years after selling the shares or within a year before selling them. Alternatively, the taxpayer can use the money to build a residential house in India within three years of selling the shares.<\/p>\n

However, there are a few conditions:<\/p>\n

    \n
  • This exemption is only available to individuals or Hindu Undivided Family (HUF).<\/li>\n
  • This tax break doesn’t apply if the taxpayer already owns more than one residential house at the time of transfer of the shares or ETF.<\/li>\n
  • Where the cost of a new asset exceeds ten crore rupees, the amount exceeding ten crore rupees shall not be considered for the purposes of computing the exemption.<\/li>\n
  • The taxpayer should not buy or construct any additional residential house except for the one they’re claiming the tax break for a stipulated period, or they’ll lose this benefit.<\/li>\n
  • The taxpayer should not sell the new house or purchase another house within three years, else, they’ll lose the benefit.<\/li>\n<\/ul>\n

    A taxpayer must understand all the provisions of section 54F of the Income Tax Act and ensure they qualify before claiming this tax exemption.<\/p>\n

    \u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

    Yes. Indian taxpayers can avail of the tax exemption under section 54F of the Income-tax Act against gains earned from selling foreign shares or ETFs if the money is utilised to buy or build a new residential house, provided the house is located in India. This means they won’t have to pay capital gain tax […]<\/p>\n","protected":false},"author":242540,"featured_media":373416,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[477],"tags":[601,600,604,602,603,598,599],"class_list":["post-373415","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-varsity","tag-etfs","tag-foreign-shares","tag-house","tag-long-term-capital-gains","tag-residential-property","tag-sec-54f","tag-tax-benefit"],"yoast_head":"\nCan I claim Sec 54F tax benefit on selling foreign shares or ETFs? – Z-Connect by Zerodha<\/title>\n<meta name=\"description\" content=\"Yes. Indian taxpayers can avail of the tax exemption under section 54F of the Income-tax Act against gains earned from selling foreign shares or ETFs if\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Can I claim Sec 54F tax benefit on selling foreign shares or ETFs?\" \/>\n<meta property=\"og:description\" content=\"Yes. Indian taxpayers can avail of the tax exemption under section 54F of the Income-tax Act against gains earned from selling foreign shares or ETFs if\" \/>\n<meta property=\"og:url\" content=\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs\" \/>\n<meta property=\"og:site_name\" content=\"Z-Connect by Zerodha\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/zerodha.social\" \/>\n<meta property=\"article:published_time\" content=\"2024-03-09T11:14:31+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-04-09T10:57:58+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/03\/BlogCovers.png\" \/>\n\t<meta property=\"og:image:width\" content=\"700\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Satya Sontanam\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@zerodhaonline\" \/>\n<meta name=\"twitter:site\" content=\"@zerodhaonline\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Neeraj Agarwala\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs\",\"url\":\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs\",\"name\":\"Can I claim Sec 54F tax benefit on selling foreign shares or ETFs? – Z-Connect by Zerodha\",\"isPartOf\":{\"@id\":\"https:\/\/zerodha.com\/z-connect\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#primaryimage\"},\"image\":{\"@id\":\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#primaryimage\"},\"thumbnailUrl\":\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/03\/BlogCovers.png\",\"datePublished\":\"2024-03-09T11:14:31+00:00\",\"dateModified\":\"2024-04-09T10:57:58+00:00\",\"author\":{\"@id\":\"https:\/\/zerodha.com\/z-connect\/#\/schema\/person\/50daf6f6fccfa85cb15b6b5def75dbec\"},\"description\":\"Yes. Indian taxpayers can avail of the tax exemption under section 54F of the Income-tax Act against gains earned from selling foreign shares or ETFs if\",\"breadcrumb\":{\"@id\":\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#primaryimage\",\"url\":\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/03\/BlogCovers.png\",\"contentUrl\":\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/03\/BlogCovers.png\",\"width\":700,\"height\":400},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/zerodha.com\/z-connect\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Varsity\",\"item\":\"https:\/\/zerodha.com\/z-connect\/category\/varsity\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Can I claim Sec 54F tax benefit on selling foreign shares or ETFs?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/zerodha.com\/z-connect\/#website\",\"url\":\"https:\/\/zerodha.com\/z-connect\/\",\"name\":\"Zerodha product and business updates\",\"description\":\"Z-Connect is Zerodha's official blog. Get the latest updates, product announcements news, and insights all in one place.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/zerodha.com\/z-connect\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/zerodha.com\/z-connect\/#\/schema\/person\/50daf6f6fccfa85cb15b6b5def75dbec\",\"name\":\"Satya Sontanam\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/zerodha.com\/z-connect\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/294bddcadbddb2076c0ac7fa1c07d5893b2b01c8e54440ad7ddfccaaa3e3ed13?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/294bddcadbddb2076c0ac7fa1c07d5893b2b01c8e54440ad7ddfccaaa3e3ed13?s=96&d=mm&r=g\",\"caption\":\"Satya Sontanam\"},\"description\":\"Personal Finance, Varsity\",\"url\":\"\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Can I claim Sec 54F tax benefit on selling foreign shares or ETFs? – Z-Connect by Zerodha","description":"Yes. Indian taxpayers can avail of the tax exemption under section 54F of the Income-tax Act against gains earned from selling foreign shares or ETFs if","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs","og_locale":"en_US","og_type":"article","og_title":"Can I claim Sec 54F tax benefit on selling foreign shares or ETFs?","og_description":"Yes. Indian taxpayers can avail of the tax exemption under section 54F of the Income-tax Act against gains earned from selling foreign shares or ETFs if","og_url":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs","og_site_name":"Z-Connect by Zerodha","article_publisher":"https:\/\/www.facebook.com\/zerodha.social","article_published_time":"2024-03-09T11:14:31+00:00","article_modified_time":"2024-04-09T10:57:58+00:00","og_image":[{"width":700,"height":400,"url":"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/03\/BlogCovers.png","type":"image\/png"}],"author":"Satya Sontanam","twitter_card":"summary_large_image","twitter_creator":"@zerodhaonline","twitter_site":"@zerodhaonline","twitter_misc":{"Written by":"Neeraj Agarwala","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs","url":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs","name":"Can I claim Sec 54F tax benefit on selling foreign shares or ETFs? – Z-Connect by Zerodha","isPartOf":{"@id":"https:\/\/zerodha.com\/z-connect\/#website"},"primaryImageOfPage":{"@id":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#primaryimage"},"image":{"@id":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#primaryimage"},"thumbnailUrl":"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/03\/BlogCovers.png","datePublished":"2024-03-09T11:14:31+00:00","dateModified":"2024-04-09T10:57:58+00:00","author":{"@id":"https:\/\/zerodha.com\/z-connect\/#\/schema\/person\/50daf6f6fccfa85cb15b6b5def75dbec"},"description":"Yes. Indian taxpayers can avail of the tax exemption under section 54F of the Income-tax Act against gains earned from selling foreign shares or ETFs if","breadcrumb":{"@id":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#primaryimage","url":"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/03\/BlogCovers.png","contentUrl":"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/03\/BlogCovers.png","width":700,"height":400},{"@type":"BreadcrumbList","@id":"https:\/\/zerodha.com\/z-connect\/varsity\/can-an-indian-taxpayer-claim-sec-54f-tax-benefit-on-selling-foreign-shares-or-etfs#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/zerodha.com\/z-connect\/"},{"@type":"ListItem","position":2,"name":"Varsity","item":"https:\/\/zerodha.com\/z-connect\/category\/varsity"},{"@type":"ListItem","position":3,"name":"Can I claim Sec 54F tax benefit on selling foreign shares or ETFs?"}]},{"@type":"WebSite","@id":"https:\/\/zerodha.com\/z-connect\/#website","url":"https:\/\/zerodha.com\/z-connect\/","name":"Zerodha product and business updates","description":"Z-Connect is Zerodha's official blog. Get the latest updates, product announcements news, and insights all in one place.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/zerodha.com\/z-connect\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/zerodha.com\/z-connect\/#\/schema\/person\/50daf6f6fccfa85cb15b6b5def75dbec","name":"Satya Sontanam","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/zerodha.com\/z-connect\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/294bddcadbddb2076c0ac7fa1c07d5893b2b01c8e54440ad7ddfccaaa3e3ed13?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/294bddcadbddb2076c0ac7fa1c07d5893b2b01c8e54440ad7ddfccaaa3e3ed13?s=96&d=mm&r=g","caption":"Satya Sontanam"},"description":"Personal Finance, Varsity","url":""}]}},"jetpack_featured_media_url":"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/03\/BlogCovers.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/posts\/373415","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/users\/242540"}],"replies":[{"embeddable":true,"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/comments?post=373415"}],"version-history":[{"count":6,"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/posts\/373415\/revisions"}],"predecessor-version":[{"id":373428,"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/posts\/373415\/revisions\/373428"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/media\/373416"}],"wp:attachment":[{"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/media?parent=373415"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/categories?post=373415"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zerodha.com\/z-connect\/wp-json\/wp\/v2\/tags?post=373415"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}