NRIs are taxed on capital gains from the sale of shares in an India company, and if one’s taxable income in India does not exceed the maximum amount not chargeable to tax, which is Rs.250,000, one is not liable to pay tax.
If the shares are listed on a stock exchange in India the capital gains will be classified as long-term if held for over 12 months. However, long term capital gains from the sale of listed Indian equity shares are tax exempt.
If the shares are not listed in India capital gains will be classified as long-term if held for over 36 months. Long term capital gains from unlisted shares are taxed at a concessional rate of 20%, but a tax exemption can be availed if the long term capital gains are reinvested in specified bonds or a residence in India.
Tax is not deducted at source on income earned by way of the sale of shares if the remittance is received in India. In this case tax could be paid as an advance in 3 instalments or before filing of a tax return by way of self-assessment tax along with the applicable interest.
If the remittance is received outside India by an NRI, tax is deducted at source. A special provision exempts NRIs from filing a tax return if their sources of income from India only includes investment income and long term capital gains.
Good luck interpreting these rules if you are a layman. It is advisable to employ an expert accountant for the purpose.