MF income of NRI
This query is : Resolved
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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?
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?
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.
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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