What is the Taxation on Investment in Mutual Funds for NRIs?

Tax rules for both NRIs and Indian residents follow a similar structure.

Capital Gain	Equity Schemes	Non-Equity Schemes
Short-term Capital Gain	20% (less than 12 months)	Added to the income and taxed as per tax slab
Long-term Capital Gain	Upto 1 lakh is tax-free, 12.5% (more than 12 months)	Added to the income and taxed as per tax slab

If an NRI’s country of residence lacks a Double Tax Avoidance Agreement (DTAA) with India, the NRI may be subject to tax in both countries. Fortunately, India has a DTAA with the USA, preventing double taxation on mutual funds for NRIs in India.

However, certain compliances and regulations are laid out by RBI and FEMA for NRIs since money is sent abroad.

USD 1 Million Scheme – Non-resident Indians (NRIs) are exempt from capital gains tax. However, they are liable to pay tax if they transfer more than 10 lakhs from their Non-Resident Ordinary (NRO) to a Non-Resident External (NRE) account.

Remittances by NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) from their NRO accounts fall under this exemption.

This is the taxation on investment in mutual funds for NRIs. If you have any doubts, you can comment below or contact us at 9891297575.

Know more about : Taxation on Mutual Funds in India