Income Tax On Mutual Funds For Nri

Income tax for nri.

Income tax on mutual funds for nri. Assets can be equity investments in india that are shares mutual funds units property etc. The duration of how long you hold an asset will determine whether it is applicable for short term or long term capital gains taxes. Non filing of income tax return in india may bring penal consequences in the form of interest late fees penalties prosecution. Nris also have to pay tax on short term capital gains on debt funds as per the person s income tax slab and that on equity funds at a flat rate of 15.

Transfer redemption of units of equity oriented mutual funds held for a period exceeding 12 months are classified as long term capital gains which are subject to tax at 10 and those held for up to 12 months are classified as short term capital gains which are taxable at 15. Health and education cess 4 will be applicable on the aggregate of tax. The gains from equity mutual funds are taxable based on the holding period. For debt mutual funds the tax slab of tds is at a rate of 30 under stcg and 20 under ltcg.

But you may have. On long term capital gains on debt funds they have to pay 20 tax with indexation and 10 tax without indexation and no tax on the sale of long term equity funds. Many nris have invested in india in the form of purchase of mutual funds life insurance policies shares securities ancestral land property unit linked insurance plans ulips fcnr fixed deposit holding of nro nre accounts etc. Thus non resident may still have incomes in india and need to get pan card accordingly file income tax return in india.

Nri capital gains tax on mutual fund is calculated based on the type of mutual fund. The ltcg tax rate on non equity funds is 20 with indexation benefit capital gains tax rates on nri mutual fund investments for the financial year 2019 20 assessment year 2020 21 are as below. Short term capital gains attract tax at the rate of 15. In case of a resident indian the person would be liable to pay tax in india irrespective of whether they earned income in india or abroad.

The applicable tax rate for short term gains on debt investments is the same as the income tax slab rate of the investor but in case of nri investors the tds applicable is 30 the highest tax slab. Mutual fund capital gain tax rates for nris fy 2019 20 ay 2020 21 the stcg tax rate on equity funds is 15. For equity based mutual funds the tax slab of tds is at a rate of 15 under stcg and 10 under ltcg. Must read mutual funds in india for nri tds for nri in mutual fund.

Example if an nri invests 500 dollars in a mutual fund in india at an exchange rate of rs. Securities transaction tax of 0 001 is applicable to purchasers and sellers of equity mutual funds. However for an nri or an rnor income which is earned outside india is not taxable in india. Nri mutual fund dividend distribution tax ddt.