Capital positive aspects tax applies on any redemption

I’m a non-resident Indian (NRI) planning to change from a debt mutual fund to an fairness MF inside an AMC in India (invested a yr in the past). How a lot tax (TDS and capital positive aspects tax) is relevant within the case? I’ve no taxable revenue from India and by no means filed ITR in India. Do I have to file ITR in India as soon as switching or redemption is finished? Can I get a refund on the tax if deducted?

—Name withheld on request

Switching throughout the identical AMC from a debt fund to an fairness fund is successfully a redemption request. Therefore, despite the fact that you may have reinvested the funds, it’s important to pay capital positive aspects tax on the redemption of your debt mutual fund. Gains from the sale of a debt mutual fund which is held for lower than three years are taxed as per regular revenue tax slab charges relevant to the person. Capital positive aspects of NRIs are subjected to TDS, subsequently the AMC will deduct TDS earlier than making a cost to you in direction of redemption. If your whole revenue is throughout the exemption restrict, you possibly can submit a declaration to the AMC with a certificates out of your revenue tax officer {that a} decrease or nil charge of TDS be utilized. Else, you possibly can file an revenue tax return in India and search a refund of TDS.

Is dividend on shares for an NRI, which is 20% and deducted by the corporate granting it, refundable by the I-T division?

—Name withheld on request

Dividend paid by an Indian firm is taxable in India within the arms of the shareholders. Where the shareholder is non-resident in India for tax functions, dividend revenue is taxable at 20% (extra cess and surcharge as relevant). Therefore, earlier than making a cost to you, an organization shall deduct TDS on the charge specified above. In case a double taxation avoidance settlement exists between the nation of your residence and India, TDS could also be deducted at a decrease charge. If your whole revenue in India is under the exemption restrict, you might file an revenue tax return and search refund of the TDS deducted.

Archit Gupta is founder and chief govt officer, ClearTax.com

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