Mutual Fund Investors
Taxation For NRI
Get The Most Out Of Your
As an NRI, you can capitalize on investment opportunities in India. But, by familiarizing yourself with the tax nuances in India, you can also get the best value for your investments.
As MF taxation rules are different for NRIs and residents.
Investments
Equity
For equity-oriented funds (investing 65% or more), redemption made within a year of purchase attracts Short-Term Capital Gains tax @ 15%.
If sold after a year, Long-Term Capital Gains over Rs 1L (in a financial year) is taxed @ 10% without indexation benefit.
Debt
For debt and non-equity oriented funds, you need to hold investments for 3+ years to qualify for Long Term Capital Gains (LTCG) rates.
LTCG for listed funds are taxed @ 20% (with indexation benefit), and @10% (without indexation benefit) for unlisted funds.
Listed Debt Funds
Listed funds are traded on the exchanges.
LTCG for listed funds are taxed @ 20% (with indexation benefit), and @10% (without indexation benefit) for unlisted funds.
Surcharges & Cess
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%. In addition, health and education cess at the rate of 4 per cent is levied on income-tax and surcharge.
Double Taxation
There is no double taxation if you live in one of the 90 countries with a DTAA (Double Tax Avoidance Treaty) with India.
If there is a treaty, tax is payable at the rate provided under the Income Tax Act, 1961 or rate in the said agreement.
TDS
A TDS certificate (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 TDS certificates are dispatched to you by the mutual fund.
No Wealth Tax
MF Units issued to NRIs are not treated as 'Assets' as defined under the Wealth-Tax Act, 1957 and hence are not liable to wealth tax.
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* Mutual Fund investments are subject to market risks, read all scheme related documents carefully.