Capital Gain Tax for NRIs on Mutual Fund

For NRIs, mutual fund redemption proceeds are subject to tax deducted at source (TDS). If you withdraw from your MF within a year, you have to pay a TDS at the rate of 30% if it's a debt fund or a gold fund and 15% if it is an equity-oriented scheme.

 

But long-term capital gains on equity mutual funds are not taxed if held for over a year. Short-term gains are taxed at 15 percent plus cess. In case of debt mutual funds, both short-term and long-term capital gains are taxed.

 

Short-term capital gains (redeemed within 3 years) are added to the income and taxed as per the individual's income tax slab. Long-term capital gains (redeemed after 3 years) are taxed as 10 percent without indexation and 20 percent with indexation (plus cess).

 

Considering your status as an NRI, the applicable tax on capital gains would have been deducted at the time of your redemption. In case if the tax liability on your investment is less than the amount of tax deducted at source then you should file for an income tax refund.

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