Question: My son is an NRI. He invests in listed shares and fairness mutual funds in India. I want to know if such earnings are taxable in India. As far as I do know curiosity for NRI are usually not taxable however do not know if dividends are taxable or not. Is he eligible for exemption restrict of ₹2,50,000 like residents Indians.
Answer: A non-resident is liable to pay tax in India solely on his Indian Income. Not all curiosity obtained by NRI are tax free in India. Though the curiosity earned by a non-resident on his NRE and FCNR account are absolutely tax free however different curiosity like curiosity on NRO account are absolutely taxable in India. Even the curiosity on NRO account are topic to TDS with none threshold restrict. The dividend revenue in addition to the capital beneficial properties earned by your son from shares listed in India and fairness oriented schemes of mutual funds are topic to tax in India.
Like a resident tax payer, a non-resident can be entitled to the fundamental exemption restrict. In case revenue aside from long run capital beneficial properties of any nature and quick time period capital beneficial properties on fairness shares/fairness mutual funds is lower than the quantity of primary exemption, a resident is entitled to set off such quick fall in opposition to the long run capital beneficial properties and quick time period capital beneficial properties on fairness merchandise. The identical facility to set off the quick fall isn’t accessible to a non-resident. So he has to pay full tax on these capital beneficial properties even when he doesn’t have some other revenue or such different revenue is under the taxable limits. So he could not need to pay any tax on dividends however he should pay tax on all quick time period capital beneficial properties earned on Indian fairness at flat price of 15%. On such long run capital beneficial properties he’ll get pleasure from a primary exemption of 1 lakhs on long run capital beneficial properties on Indian equities and past one lakhs he should pay @ 10% with none indexation profit.
The author is a tax and investments professional and could be reached at [email protected]
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