"Tax Guide for NRIs: Mutual Funds Simplified"

The article provides a comprehensive overview of the taxation on income earned by Non-Resident Indians (NRIs) from mutual funds in India, detailing tax rates for various types of funds based on income nature—short-term, long-term capital gains, and dividends. Key highlights include differentiated tax treatments for equity-oriented, debt-oriented, and hybrid mutual funds, along with TDS implications for dividend income.


The taxation on income earned by Non-Resident Indians (NRIs) from mutual funds in India varies based on the type of mutual fund and the nature of income (dividends or capital gains). Below is a detailed breakdown:
Type of Mutual Fund Nature of Income Tax Rate Details
Equity-Oriented Mutual Funds Short-Term Capital Gains (STCG) 15% Applicable when units are sold within 12 months.
Equity-Oriented Mutual Funds Long-Term Capital Gains (LTCG) 10% Applicable when units are sold after 12 months. Exemption up to ₹1 lakh per financial year.
Debt-Oriented Mutual Funds Short-Term Capital Gains (STCG) As per NRI's income tax slab Applicable when units are sold within 36 months.
Debt-Oriented Mutual Funds Long-Term Capital Gains (LTCG) 20% (with indexation) Applicable when units are sold after 36 months.
Hybrid Mutual Funds (Equity Dominant) Short-Term Capital Gains (STCG) 15% Similar treatment as equity-oriented mutual funds.
Hybrid Mutual Funds (Equity Dominant) Long-Term Capital Gains (LTCG) 10% Similar treatment as equity-oriented mutual funds.
Hybrid Mutual Funds (Debt Dominant) Short-Term Capital Gains (STCG) As per NRI's income tax slab Similar treatment as debt-oriented mutual funds.
Hybrid Mutual Funds (Debt Dominant) Long-Term Capital Gains (LTCG) 20% (with indexation) Similar treatment as debt-oriented mutual funds.
Dividends from Mutual Funds Dividend Income 20% Mutual funds deduct tax at source (TDS) before paying dividends to NRIs.


Capital-gains-tax-nris-real-e    Differences-nri-resident-tax-    Dtaa-benefits-for-nris    Income-tax-filing-nris    Inheritance-gift-tax-nris    Mutual-funds-tax-nris    Penalties-interest-nris-late-    Rental-income-tax-nris    Repatriation-funds-tax-nris    Residential-status-for-tax   

Topic

  • Home

  • Capital-gains-tax-nris-real-e

  • Differences-nri-resident-tax-

  • Dtaa-benefits-for-nris

  • Income-tax-filing-nris

  • Inheritance-gift-tax-nris

  • Mutual-funds-tax-nris

  • Penalties-interest-nris-late-

  • Rental-income-tax-nris

  • Repatriation-funds-tax-nris

  • Residential-status-for-tax

    Read more