Good News for NRIs as investing in mutual funds taxation has changed and become easier for you to invest in India. Let’s learn all about capital gains tax and the latest news on it.
What is Capital Gains Tax Relief on Mutual Funds?
Capital Gains tax is the certain tax that you need to pay when you sell mutual fund units. It is applied to your profit. As a result, you need to pay taxes depending on whether the fund is equity or debt-based and how long you’ve held the investment. However, the recent ruling for capital gains tax relief on mutual funds has opened beneficial doors for NRIs.
Latest Mumbai ITAT Ruling for Capital Gains on Mutual Funds
In a hearing, the Mumbai ITAT stated that capital gains derived from mutual funds for Non Resident Indians may not be taxable in India if the NRI resides in a country which has signed a Double Taxation Avoidance Agreement (DTAA) with India.
If NRIs taxes have already been paid in the taxpayer’s country of residence, it becomes unnecessary to pay in India. Thus, this ruling reinforces the benefit of checking your DTAA terms and making sure your TRE Filing (Tax Residency Certificate) is up-to-date and correctly submitted.
Real World Example of NRI Saving 135 Rs. Crores
A recent example showed how a smart NRI investor avoided paying ₹135 crore in taxes by using mutual fund rules carefully.
Since he lived in the UAE—a country that has a tax treaty with India—and held all the required documents, he claimed benefits under the India-UAE DTAA to avoid double taxation on his capital gains.
This case highlights the significance of timely ITR filing by NRIs to avail such exemptions. By filing correct ITRs and submitting supporting documents such as a TRC, NRIs can ensure tax compliance in India while enjoying benefits under relevant DTAAs.
Conclusion
In conclusion, if you’re a non-resident Indian (NRI) looking to maximize returns from mutual fund investments in India, it’s crucial to plan your tax strategy carefully. Understanding and applying Capital Gains Tax Relief on Mutual Funds can help you save money when backed by proper documentation and legal awareness. If you need any guidance related to paying and saving taxes in India, you can talk to our professionals at 8881-069-069.
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