New Tax Clause In India Offers Significant Relief To NRIs Investing In Startups And Unlisted Shares

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.

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.

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.