If you are a( ) and confused by the tax aspects related to , this is for you.
As an, you might be keen to capitalize on opportunities back home. By becoming aware of the tax nuances, you can also get the best value for your .
How are thetaxed?
For the purpose of, rules are the same for both residents and .
For equity-oriented( 65 per cent or more into equities), any redemption made within a year of purchase attracts Short-Term (STCG) tax of 15 per cent. And if it is sold after a year, Long-Term (LTCG) over and above Rs 1 lakh (in a financial year) is taxed at 10 per cent without benefit.
For debt and other non-equity oriented, you need to hold for three years or more to qualify for LTCG rates. While LTCG for listed (say FMP ) are taxed at the rate of 20 per cent (with benefit), it is 10 per cent (without benefit) for unlisted . Listed are traded on the exchanges. If you sell a debt fund within three years, STCG is applicable at the rate of 30 per cent, if you are in the highest tax bracket.
How are these surcharges and cess levied?
Surcharge rates are between 10%-37% if your income is above Rs 50 lakh annually in India”. For income below Rs 50 lakhs, it is 0%. For instance, if your Indian income in a year is Rs 1 crore, then 10% surcharge is applicable and it increases with your income. In addition, health and education cess at the rate of 4 per cent is levied onand surcharge.
For example, if your annual income is Rs 1 crore, then you pay a surcharge of 10% on the 10% LTCG base rate which makes it effectively 11%. On this rate, four per cent cess is applicable, which makes the effective rate at 11.44%.
What about Tax deductions?
While there is no( ) for local investors, redemption by are subject to at the highest tax rates. For instance, for LTCG made in is 10% while it is 20% for debt funds.
However, if you have lower tax liabilities, you can claim tax refunds through your yearly tax filings. Besides, if theinvestor produces a zero or lower withholding certificate from the authorities, then tax shall be deducted at such rates mentioned in the certificate.
Will you be subject to double-?
Not if you reside in one of 90 countries that has a DTAA (Double Tax Avoidance Treaty) with India. In case of a treaty, is payable at the rate provided under the Act, 1961 or the rate provided in the said agreement, whichever is more beneficial to the investor. So, if you stay in US or Canada, then your will be considered for tax purposes in your resident country.
Areunits liable to Wealth tax?
No, units issued towill not be treated as ‘Assets’ as defined under the Wealth-Tax Act, 1957 and hence will not be liable to wealth tax.
How will you get to know about?
Acertificate (Form 16 A) is issued in the name of the investor mentioning the details of the transaction and the tax deducted. Once in a quarter, these digitally-signed certificates are dispatched to you by the .
What about the?
From April 1, 2020, the Central Government has abolished(DDT) that was levied on the paid by the . The are now taxable in the hands of the unitholders at their marginal tax slab rates, subject to withholding of taxes. rate for is 20 per cent plus surcharge and cess.
Can you set-off yourwith losses?
Acan be set-off (netted) against a capital loss made during the year. You can set-off gains of a debt fund against that of loss or vice-versa.
Though, set-off rules for long-term capital loss and short-term capital loss are different.
A short-term capital loss can be set-off against both LTCG and STCG. However, a long-term capital loss can be set-off only against LTCG.
Also, you can carry forward unadjusted losses after separating them into short-term and long-term capital losses for up to eight subsequent years. You may consult your tax advisor for more guidance.