Tds for nri in mutual funds
This query is : Resolved
30 May 2018
My query is that suppose a Nri accumulates 1 Cr as captain Gains on equity oriented mutual funds, so while redemption , as F.Y 2018-19 mutual fund house will deduct a TDS of 11.96% (11.96 Lakhs), and also while filing I.T return Nri will deduct 11.96% (11.96 Lakhs) as his capital gain in returns, so my question is that , can a Nri claim the TDS of 11.96% (11.96 Lakhs)from the I.T department ? And would he get the entire amount of TDS i.e., 11.96 Lakhs back or not ? Otherwise Nri will have to pay a total of 11.96+11.96= 23.92% of his capital gains ?
30 May 2018
how did you arrive at this 23.92%???
08 June 2018
11.96+11.96 =23.92, i.e. , 11.96 % TDS plus 11.96% Nri has to show as capital gain, in his I.T return....
27 July 2025
Got it — you’re concerned that the NRI is paying 11.96% TDS *and* again showing the same 11.96% as taxable capital gains in the return, which might look like double taxation totaling 23.92%.
Here’s how it actually works:
### 1. TDS Deducted at Redemption
The mutual fund deducts TDS @ \~11.96% on the capital gains at redemption. This is a **prepaid tax** (tax deducted at source).
### 2. Income Tax Return Filing
The NRI reports the **actual capital gain income** (not the TDS) in the ITR and calculates tax liability on it.
### 3. Claiming Credit for TDS
The TDS deducted (11.96%) is a **tax credit** against the total tax liability. So the NRI doesn’t pay tax twice. The tax paid (TDS) is adjusted when filing the return.
### 4. Refund / Additional Tax
* If total tax liability (calculated as per applicable slab or rate) is **less than the TDS deducted**, the NRI gets a **refund** of the excess TDS.
* If it is **more**, the NRI pays the balance tax.
---
### So:
* The 11.96% TDS is *not* an additional tax; it’s tax deducted upfront.
* Tax is payable on capital gains (say 11.96% rate). You show that full income and calculate tax on it.
* TDS is adjusted against your tax liability, so no double taxation.
* If you file return properly, you get refund if excess tax paid.
---
Here’s how it actually works:
### 1. TDS Deducted at Redemption
The mutual fund deducts TDS @ \~11.96% on the capital gains at redemption. This is a **prepaid tax** (tax deducted at source).
### 2. Income Tax Return Filing
The NRI reports the **actual capital gain income** (not the TDS) in the ITR and calculates tax liability on it.
### 3. Claiming Credit for TDS
The TDS deducted (11.96%) is a **tax credit** against the total tax liability. So the NRI doesn’t pay tax twice. The tax paid (TDS) is adjusted when filing the return.
### 4. Refund / Additional Tax
* If total tax liability (calculated as per applicable slab or rate) is **less than the TDS deducted**, the NRI gets a **refund** of the excess TDS.
* If it is **more**, the NRI pays the balance tax.
---
### So:
* The 11.96% TDS is *not* an additional tax; it’s tax deducted upfront.
* Tax is payable on capital gains (say 11.96% rate). You show that full income and calculate tax on it.
* TDS is adjusted against your tax liability, so no double taxation.
* If you file return properly, you get refund if excess tax paid.
---
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