Big Tax Relief for NRIs in Budget 2025! The Indian government has introduced a powerful clause under the New Income Tax Bill, 2025, that allows Non-Resident Indians (NRIs) to save up to 72% in long-term capital gains (LTCG) tax on unlisted shares of Indian companies.

This blog explains Clause 72(6), how the forex fluctuation benefit works, which NRIs qualify, and how you can maximize tax savings on investments in Indian startups and unlisted equity shares.

What is Clause 72(6) in Income Tax Bill 2025?

Clause 72(6) is a new tax provision introduced in the 2025 Income Tax Bill that allows NRIs (excluding Foreign Portfolio Investors) to:

Calculate capital gains on unlisted shares and debentures in the same foreign currency (e.g., USD) used for acquisition.

This means you can now adjust for foreign exchange (forex) fluctuations between the time of buying and selling the asset, ensuring you're taxed only on actual profit, not on inflated INR gains.

Applicable to:

• Unlisted equity shares of Indian companies
• Debentures of Indian companies
• Only for Non-Resident Indians (NRIs)
• Excludes Foreign Portfolio Investors (FPIs) and listed shares (like NSE/BSE)

Why This is a Game-Changer for NRIs Investing in India

Until now, under the Income Tax Act, 1961, NRIs had to compute capital gains in Indian Rupees (INR). This created a major problem:

Old Problem:
If the INR depreciated over time, your investment looked more profitable in INR, even if the value in USD remained the same.

New Solution:
Under Clause 72(6), you now:

• Compute capital gains in foreign currency (USD, GBP, etc.)
• Then convert the final capital gain to INR on the date of sale for tax purposes

Example: Tax Calculation with and without Forex Benefit

With the forex benefit, you pay tax only on real gains in USD—not inflated gains due to rupee depreciation.

Who Can Claim This NRI Tax Benefit?

Eligible:

• Non-Resident Indians (NRIs)
• Investments in unlisted equity shares
• Debentures of Indian companies
• Transactions where purchase was made in foreign currency

Not Eligible:

• Listed shares on NSE/BSE or any recognized exchange
• Foreign Portfolio Investors (FPIs)
• Shares covered under Section 198

Top Benefits of Clause 72(6) for NRIs

Why This is Great for NRI Startup Investors

Most NRI investment in India go into:

• Startups (seed/pre-IPO funding)
• Real estate holding companies
• Unlisted family-owned businesses

These often issue unlisted equity shares—exactly the kind of investments covered under Clause 72(6).

If you're an NRI investing in India, this clause can:

• Dramatically lower your tax bill
• Improve post-tax return on investment (ROI)
• Encourage long-term investments in Indian ventures

Implementation: What NRIs Should Watch Out For

Experts recommend that the government should issue clear implementation guidelines, including:

• Standard exchange rate to be used – RBI or Authorized Dealer (AD) bank rate?
• Documentation needed to prove forex usage during acquisition
• Clarification on how to report such gains in ITR for NRIs
• Applicability to joint holdings, trusts, or SPVs

Real-World Scenario

NRI Startup Investment Example:

• You invest USD 500,000 in an Indian startup at Rs. 70/USD (Rs. 3.5 crore)
• After 5 years, you exit at USD 800,000 when Rs. 85/USD
• Old regime would show a capital gain of Rs. 3.3 crore
• Under Clause 72(6), your gain = USD 300,000 × Rs. 85 = Rs. 2.55 crore
• Tax saving = Rs. 75 lakh × 12.5% = Rs. 9.4 lakh saved

Need Help Filing NRI Taxes or Computing Capital Gains?

At Dinesh Aarjav & Associates, we specialize in:

• NRI tax planning and filing
• Capital gains computation (with forex adjustment)
• 15CA/CB certification for fund repatriation
• Startup investment structuring
• DTAA advisory and planning

👨‍💼 Serving NRIs in USA, UK, UAE, Canada, Singapore & Australia
📧 info@dineshaarjav.com
🌐 www.dineshaarjav.com

Final Thoughts

The forex fluctuation clause (72(6)) is one of the most investor-friendly reforms for NRIs in years. It not only ensures fair taxation but also unlocks major tax-saving opportunities for NRIs investing in unlisted equity in India.

Start planning your NRI investments now to take full advantage of this new tax benefit in 2025.