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Tax Implications of International Funds

Note that capital gains from any overseas investments would have tax implications here. In his Budget speech, Finance Minister Arun Jaitley made it clear that concealing income in relation to foreign assets will attract a penalty of 10 years' imprisonment. So you have to disclose all investments in stocks, bonds, funds and real estate that you make abroad while filing returns here. Nonfiling of returns or filing of returns with inadequate disclosure of foreign assets will be liable for prosecution with punishment of rigorous imprisonment up to 7 years. Income in relation to any undisclosed foreign asset or undisclosed income from any foreign asset will be taxable at the maximum marginal rate. You also have to mention the date of opening a foreign account while filing returns.

The tax treatment for gains on stocks listed abroad is different from that for domestic equities as STT is not payable on these investments. In India, the gains arising on sale of an asset purchased abroad and held for more than 12 months (shares or units) or 36 months (in any other case), are treated as long-term capital gains and taxed at the rate of 20%. Gains from sale of assets held for a shorter period are treated as short-term capital gains and taxed at the applicable rates. So while gains from Indian stocks are exempt from taxes if sold after a year of purchase, profits from investments in foreign shares are not exempt. However, one can claim indexation benefits. There are other ways to escape the tax net. Tax arising on such capital gains can be avoided by reinvesting the proceeds for purchase of a residential property within one year prior to sale date or two years from the sale date or within three years for an under-construction property. Another option is to invest the proceeds in NHAI or REC bonds within 6 months from such a sale. However, the maximum one can invest here is `50 lakh. The 6% interest one earns is taxable.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

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