uTrade AlgosNon-Resident Indians (NRIs) investing in the Indian stock market are subject to specific tax rules. Here’s a breakdown of the key tax implications:
Capital Gains Tax
1.Short-Term Capital Gains (STCG):
- If you hold an investment for less than 12 months, any profit realised is considered STCG.
- The current tax rate for NRIs on STCG from equity shares and equity-oriented mutual funds is 20%.
2. Long-Term Capital Gains (LTCG):
- If you hold an investment for more than 12 months, any profit is considered LTCG.
- For equity shares and equity-oriented mutual funds, LTCG is taxed at a flat rate of 10% on gains exceeding ₹1 lakh.
Tax Deducted at Source (TDS)
1. TDS on Capital Gains:
- A TDS of 10% is deducted on LTCG from equity shares and equity-oriented mutual funds.
- A TDS of 20% is deducted on STCG from equity shares and equity-oriented mutual funds.
Other Considerations
1. Double Taxation Avoidance Agreements (DTAs):
- India has DTAs with many countries. These agreements can help reduce your overall tax liability by avoiding double taxation.
2. Filing Income Tax Returns:
- NRIs are required to file income tax returns in India if they have any taxable income from Indian sources.
Important Note:
- Tax laws are subject to change. It’s advisable to consult with a tax professional to get the most accurate and up-to-date information.
By understanding these tax implications, NRIs can effectively manage their investments in the Indian stock market and optimise their returns.