To support foreign investment in the startup ecosystem in India, the Indian government has announced a major tax benefit to Non-Resident Indians (NRIs). Clause 72(6) of the 2025 Income Tax Bill allows NRIs to compute their long-term capital gains (LTCG) in the same foreign currency that they originally acquired the unlisted equity shares. By allowing NRIs to calculate their LTCG taxes in the same currency, it captures currency fluctuations for tax calculation, which could potentially make India a better investment option for the NRIs and foreign Indian reserves.
Understanding Clause 72(6): Forex Dopelowance
According to Clause 72(6) of the 2025 Income Tax Bill, NRIs will be able to calculate capital gains from the transfer of unlisted equity shares or debentures issued by an Indian company by converting all acquisition costs, expenses related to the transfer of shares, and all sale proceeds, into the same foreign currency used to acquire them from the Indian Company. This means that NRIs will only be taxed on their actual profits, taking into account that currency will depreciate and the impact this has on tax for NRIs.
Also Read: For NRIs And H-1B Workers: US Reduces Remittance Tax To 3.5%
Impact On NRI Investors
This regime change isn't simply a technical adjustment; rather has the potential to alter NRIs' perspectives on continuing startup and private equity investment activities in India. Let's examine its direct benefits.
Significant Tax Savings
NRIs now have the opportunity to tremendously reduce their lifetime capital gains tax (LTCG) by effectively taking forex fluctuations into account. Since NRIs are no longer taxed on artificial gains arising from depreciation of the rupee, this can yield tax reductions of up to 72%, or some even claim a 100% tax concession.
Greater Appeal To Invest
With this tax benefit, NRIs will be prompted to invest with greater confidence in Indian startups and unlisted companies, knowing that their tax obligations will simply reflect their actual economic gain.
Scope And Exclusions
Although the provision will offer huge tax relief, it applies only if you meet a few eligibility and asset criteria. Read below to better understand exactly where this clause applies and where it doesn't.
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Applicable Asset: Only unlisted equity shares and debentures of Indian companies fall under the purview of this benefit.
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Exclusions: Listed equity shares on exchanges in India will not have this benefit.
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Eligible Investors: Clause 72(6) is exclusively for NRIs and does not apply to foreign institutional investors ( FIIs).
Also Read: Exploring The Benefits Of India's New Tax Regime For FY 2025-26
Expert Opinions
Tax professionals have given their opinion of Clause 72(6) a warm reception, and regard it as a fair tax opportunity for NRIs, but by taxing gains along with actual economic gains, it helps reduce over-taxation hours using currency effects that have been a long-term concern.
Conclusion
The provision of Clause 72(6) in the 2025 Income Tax Bill is a progressive step towards equitable taxation for NRIs. Allowing capital gains to be calculated in the currency of the original investment affords huge tax relief, plus improves India's position, as an attractive country for foreign investment into start-ups and unlisted entities.
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