Everything NRIs Need To Know About Taxes on Investments In India.

 The Indian market is ripe with various investment opportunities for residents and non-resident Indians alike. NRIs from across the world have made the most of this opportunity and invested in India to gain lucrative returns on their funds. While most NRIs have NRE Savings Accounts, NRO Savings Accounts, or FCNR Accounts to manage their money in India, some NRIs go beyond and invest in a lot more to expand their portfolio.

NRIs can invest in debentures, government securities, listed non-convertible debentures, mutual funds, and more either on repatriation or non-repatriation basis. NRIs enjoy many benefits when they invest in India, however, there may be questions about how these investments are taxed. 

The taxation on NRI investments depends upon whether India has signed a Double Tax Avoidance Treaty (DTAA) with the NRIs country of residence. If yes, then the NRIs need not pay double tax on their investments in India. However, if the DTAA is not signed, the NRIs are expected to pay double the tax, both in their country of residence and in India. The tax rate also depends on the type of instrument an NRI has invested in and the period of investment.

Capital gains on investments are taxed for NRIs in India. Here’s everything you need to know about them.

Long term Capital Gain On Sale Of Equity Shares (Listed) or Equity Oriented Mutual Fund Units:

Equity shares or equity-oriented mutual funds held over 12 months are long-term instruments. If the gains on these instruments are more than 1 lakh, then the tax is 10%. If the gain is less than a lakh then it's exempt from taxation. 

 

Long Term Capital Gain On Other Assets

If you have unlisted shares or securities of an unlisted company for more than 24 months, it qualifies as a long-term capital gain asset. The tax liability on these securities is 10% without indexation benefit. 

If an NRI invests in debt-oriented mutual funds and holds them for over 36 months, then the tax liability is 20% after indexation.

Short Term Capital Gain On Equity Shares (Listed) Or Equity Oriented Mutual Funds

A short-term capital gain is when an NRI sells his/her equity shares and equity-oriented mutual funds within 12 months of acquisition. These short-term capital gains are taxed at 15%.

Short Term Capital Gain On Other Assets

If an NRI holds securities and shares for less than 24 months, it qualifies as short-term capital gains. The tax of short-term capital gains is charged as per the slab rate applicable to the non-resident Indian.

Debt-oriented mutual funds are classified as short-term if they are held for less than 36 months.

 

Apart from the above charges, NRIs are also expected to pay the health and education cess which is chargeable at the rate of 4% over the given tax rates and surcharge. While resident Indians have a basic exemption limit, Non-resident Indians don’t get the same benefit. 

 

Note: Any redemption made by an NRI is subject to tax deduction at the highest tax rate.

 

SBM Bank India provides multiple investment options to their NRI customers. From mutual funds to Portfolio Investment Scheme (PIS) and so much more, there are many options to choose from based on your financial goals and needs. While the bank offers various investment options, they also provide a host of privileges and services that go hand-in-hand with their world-class banking services. 

 

From managing your property in India, drafting a will, FEMA consulting, assistance in tax filing and refunds to assistance in procuring documentation like Aadhaar, PAN, OCI card, and more, the bank has a pool of experts to assist and guide you every step of the way. Having spent most of their time away from home, Non-Resident Indians could face some difficulties while dealing with taxation on their wealth and earnings in India. From helping them with the filing of their Income Tax returns to assisting in areas of refunds, repatriation, and FEMA consultancy, SBM Bank India enables it all so that the customers can have the outstanding experience they are promised.