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I am in US for last 10 years. I bought few stocks in India when I used to work there.

  • I never operated the stock (demat) account (never sold or bought) since I moved here
  • never reported them on my tax returns in US. (I guess it is some other form where you need to declare foreign securities)
  • There is a saving ac linked to stock account but it has low < 5k USD balance

Now I want to sell them and bring money here. What is least taxable option while avoiding any penalty.

  • STOP! You are saying you think you have committed income tax fraud, in your second and third point. At the very least, you need an accountant who specialises in income taxes for people with foreign income. You may also need a lawyer. – ChrisInEdmonton Dec 22 '15 at 14:50
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From India Point of view; someone may put the US point of view ...

As an NRI you are not supposed to hold an Ordinary Demat Account. Please have this converted to NRO NON-PINS ASAP. Related Question Indian Demat account

If the shares were purchased before 1-Oct-2004, they are liable for Long Term Capital Gains tax in India.

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Convert the money into United States Dollars, put it in an NRE account in India and get 5% per annum for the USD.

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