Q: Do NRIs get the Rs 1.25 lakh LTCG exemption on equity mutual funds?

Yes, NRIs get the same Rs 1.25 lakh exemption on LTCG from equity mutual funds as resident Indians. This exemption applies per financial year. Any gains above Rs 1.25 lakh are taxed at 12.5%.

Q: How is TDS deducted on mutual fund dividends for NRIs?

Mutual fund companies deduct 20% TDS on dividends paid to NRIs. This TDS can be reduced to DTAA rates (12.5-15%) if you submit Tax Residency Certificate (TRC) to the AMC. You can claim excess TDS refund when filing ITR.

Q: Can NRIs invest in mutual funds through NRE or NRO accounts?

NRIs can invest in mutual funds using both NRE and NRO accounts. Investments from NRE account are fully repatriable (gains + principal). Investments from NRO account have limited repatriation (up to USD 1M per year). Section 115E benefits apply if invested through foreign remittance.

Q: What is the Section 115F exemption benefit for NRIs on mutual funds?

Under Section 115F, if NRIs reinvest proceeds from sale of specified foreign exchange assets (including mutual funds bought with foreign remittance) into other specified assets within 6 months, they can claim proportionate exemption from capital gains tax.

Question 1

What are the capital gains tax rates for NRIs on equity mutual funds after Budget 2024?

Accepted Answer

LTCG (holding >12 months): 12.5% on gains above Rs 1.25 lakh exemption. STCG (holding <=12 months): 20%. Dividends: 20% TDS. These rates apply to equity mutual funds and direct equity investments. No indexation benefit is available.

Question 2

Do NRIs get the Rs 1.25 lakh LTCG exemption on equity mutual funds?

Accepted Answer

Yes, NRIs get the same Rs 1.25 lakh exemption on LTCG from equity mutual funds as resident Indians. This exemption applies per financial year. Any gains above Rs 1.25 lakh are taxed at 12.5%.

Question 3

How is TDS deducted on mutual fund dividends for NRIs?

Accepted Answer

Mutual fund companies deduct 20% TDS on dividends paid to NRIs. This TDS can be reduced to DTAA rates (12.5-15%) if you submit Tax Residency Certificate (TRC) to the AMC. You can claim excess TDS refund when filing ITR.

Question 4

Can NRIs invest in mutual funds through NRE or NRO accounts?

Accepted Answer

NRIs can invest in mutual funds using both NRE and NRO accounts. Investments from NRE account are fully repatriable (gains + principal). Investments from NRO account have limited repatriation (up to USD 1M per year). Section 115E benefits apply if invested through foreign remittance.

Question 5

What is the Section 115F exemption benefit for NRIs on mutual funds?

Accepted Answer

Under Section 115F, if NRIs reinvest proceeds from sale of specified foreign exchange assets (including mutual funds bought with foreign remittance) into other specified assets within 6 months, they can claim proportionate exemption from capital gains tax.

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