Non resident indian - taxation on short term capital gain on shares/ equities

Tax queries 323 views 8 replies

RAJU

ACCOUNTANT

58 Points Joined October 2017

Dear All

There is an issue with the Tax filing with an NRI . Please see the details for AY 2018-19

Short term capital gain on shares of indian companies purchased from Bombay stock exchange - Rs 25000

(These purchases are made from the NRE/ NRO Ruppee a/c maintained in India )

TDS deducted on the above @ 15%

Interest from NRE Account - Rs 5000

Interest from NRO Account - Rs 3500 - (TDS already Deducted )

So total Income is 33500

Queries:

1 Can he file the return and claim refund of the TDS - as his taxable income is below 250000 for AY 18-19

2 Chapter 6A deduction for LIC premium is applicable for an NRI who as only STCG ?

Read in some articles that NRI cannot set off the exemption limit of 250000 if he has only income under capital gain on shares

Aslo mentioned in the same article , 80 c and other decuctions are not available for the NRI if he has only capital gain income from shares ( no ther income)

Last query , where will this STCG will be shown in ITR 2 CG Sheet . If it is shown under nos 3 or 4 , then the ITR 2 IS automatically calculating the Income Tax on the full STCG

Your valuable advice is highly appreciated

Thanks

Replies (8)

CA Sunil Kumar

Chartered Accountant

4524 Points Joined July 2014

1. He is required to file income tax return and pay tax on stcg and interest from NRO account and claim TDS deducted against tax liability. Note interest from NRE account is exempt from tax.
2.No
3. No 80C deductions and exemption against STCG.

RAJU

ACCOUNTANT

58 Points Joined October 2017

Thanks for the information .

He can get full refund of the TDS on the basis that his total income is less than the limit 250000?

Thanks

CA Sunil Kumar

Chartered Accountant

4524 Points Joined July 2014

Yes, he can claim refund of TDS deducted.

RAJU

ACCOUNTANT

58 Points Joined October 2017

Thanks for the reply .

But while reading sec 111 A of IT ACT , it seems that the basic exemption of 250000 is not to be set off against the STCG on shares . Does this mean that the NRI has to pay 15% tax on stcg on shares and there is no chance to get a refund of the same , without considering the basic exemption limit as if the exemption is not allowable on STCG on share

Please advice

CA Sunil Kumar

Chartered Accountant

4524 Points Joined July 2014

Yes, you will have to pay tax on short term capital gain.

RAJU

ACCOUNTANT

58 Points Joined October 2017

Thanks That means , to summarise , TDS refund on STCG on shares is not available to NRI even if his income is less than the threshold limit of Rs 250000 . Tax must be paid on STCG irrespective of total Income

CA Sunil Kumar

Chartered Accountant

4524 Points Joined July 2014

Yes, First calculate tax on STCG and deduct TDS and pay balance tax.

RAJU

ACCOUNTANT

58 Points Joined October 2017

Dear Sir

Thanks for the proper advice .

But I am surprised to see that the said NRI has filed his ITR for the last 3 years and got refund of his full TDS . When I checked his previous returns , and he got also the chapter 6 A deductions, 80 C ETC ( max 150000 subject to GTI) . .