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Apr 15, 2025
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Explained: Will NRIs be liable for capital gains tax on mutual fund sales in India?
The short-term capital gains amounting to Rs 1.35 crore, arising from the redemption of mutual fund units, are not taxable in India for the Non-Resident Indian (NRI) investors under the India-Singapore tax treaty. This came as a relief for the NRI investors as the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) eased out the rule.
The case involved A Shah, a Singapore tax resident, who declared capital gains of Rs 88.75 lakh from debt mutual funds and Rs 46.91 lakh from equity mutual funds for the financial year 2021–22. In her income tax return, she claimed exemption for these gains under the residual clause of Article 13 of the India-Singapore tax treaty, asserting that such gains are taxable only in her country of residence, Singapore.
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