Section 115AB of ITA, 1961 : Section 115Ab: Tax On Income From Units Purchased In Foreign Currency Or Capital Gains Arising From Their Transfer

Explanation using Example

Imagine an investment fund based in Singapore, known as "Global Growth Fund," which focuses on investing in emerging markets. This fund qualifies as an "overseas financial organisation" under Indian tax law because it is established under Singaporean law, has an arrangement with an Indian public sector bank for investments in India, and this arrangement is approved by the Securities and Exchange Board of India (SEBI).

Global Growth Fund invests in units of a mutual fund in India and after holding them for more than a year, it decides to sell some units at a profit. The profit from the sale qualifies as long-term capital gains. Since these units were purchased in US dollars, a foreign cur...

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