Question 1

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

Accepted Answer

Clause 72(6), effective from April 2026, allows capital gains on foreign assets to be computed in the foreign currency first, then converted to INR at the sale date exchange rate. This excludes notional forex appreciation from taxation, potentially saving 30-72% in taxes.

Question 2

How does the old method tax foreign asset gains?

Accepted Answer

Under the current method, gains are computed entirely in INR: Sale value in INR minus purchase cost in INR. This includes forex appreciation as taxable gains, even though it's not a real economic gain on the underlying asset.

Question 3

Which assets does the new forex rule apply to?

Accepted Answer

The new Clause 72(6) applies to specified foreign currency assets including unlisted shares, foreign securities, immovable property abroad, and other capital assets denominated in foreign currency. It aims to tax only real economic gains, not currency fluctuations.

Question 4

Can I use the new method for assets sold before April 2026?

Accepted Answer

No, the new computation method under Clause 72(6) applies only to transfers made on or after April 1, 2026. For assets sold before this date, the existing INR-based computation method applies, including forex gains in the taxable amount.

Question 5

How much can I save with the new forex computation rule?

Accepted Answer

Savings depend on rupee depreciation during your holding period. If USD appreciated from Rs. 75 to Rs. 85 (13.3% forex gain) and your asset grew 50% in USD, the new rule can reduce your tax bill by 30-40% by excluding the Rs. 10 per dollar appreciation from taxation.

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