MF income of NRI

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Yes, mutual fund income earned by an NRI from selling funds in India is taxable in India. The tax rate depends on whether it's an equity or debt fund and the holding period, with specific rates for short-term and long-term capital gains. If an NRI friend is a resident of the UAE, they may benefit from the Double Taxation Avoidance Agreement (DTAA) between India and the UAE, potentially leading to lower tax rates or credits for taxes paid. To claim DTAA benefits, they'll need a Tax Residency Certificate (TRC) from the UAE and must file Form 10F along with their Indian tax return.

Keyur

Keyur (Querist)
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19 May 2025 Sir,

One of my friends resident in UAE. he sale of MF during the year in india and earn profit.

This income is taxable in india?? And what tax rate??
He has Tax Identity Number. DTTA ??

If DTTA are there than what to do?? I need to file other form before filling his Tax return?

Keyur

Keyur (Querist)
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30 May 2025 Please comments your views

Keyur

Keyur (Querist)
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02 June 2025 Please guide me today, please

Keyur

Keyur (Querist)
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03 June 2025 Please update me on urgently today.

Keyur

Keyur (Querist)
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11 June 2025 Please update me on priority basis

Thanks

Aashok Kumar Sharma

Aashok Kumar Sharma

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12 August 2025 1. Is Mutual Fund Income Taxable in India for NRI?
Yes, capital gains from sale/redemption of mutual funds in India by an NRI are taxable in India under the Income Tax Act.

2. Tax Rates Applicable
Equity Mutual Funds (where STT is paid):

Short Term Capital Gains (STCG) (holding ≤ 12 months): Taxed at 15%

Long Term Capital Gains (LTCG) (holding > 12 months): Gains above ₹1 lakh exempt; balance taxed at 10% without indexation

Debt Mutual Funds (Non-Equity):

STCG (holding ≤ 36 months): Taxed as per applicable slab rates

LTCG (holding > 36 months): Taxed at 20% with indexation

3. DTAA (Double Taxation Avoidance Agreement) Between India & UAE
India and UAE have a DTAA, so tax paid in India can be claimed as credit in UAE if the individual is liable to tax there.

Under DTAA, sometimes lower tax rates or exemptions may apply.

Important: NRI needs to provide a Tax Residency Certificate (TRC) from UAE tax authorities and file Form 10F (declaration) to claim benefits under DTAA.

4. Other Compliance Before Filing Tax Return
NRI should obtain and keep Tax Residency Certificate (TRC) from UAE.

File Form 10F along with the Income Tax Return to claim DTAA benefits.

Tax should ideally be deducted at source (TDS) by mutual fund or payer at applicable rates (often 20% for debt funds LTCG, 15% for equity funds STCG).

NRI can file Income Tax Return (ITR-2 or ITR-3) in India to claim refund (if excess TDS) or report income.

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