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TAX GURU: 'Can NRIs claim TDS on MFs sold?'

By ANIL REGO
December 10, 2021 08:58 IST
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'I want to know if I can reclaim the TDS deducted.'

Illustration: Dominic Xavier/Rediff.com

Anil Rego, CEO, Right Horizons, answers your personal income tax queries.


Satyaprem Hiremath: I went through the number of queries you have answered and found it very useful. Appreciate it.

I have a query regarding the Long Term Capital Gains for mutual funds.

From the mutual fund website, I have downloaded the capital gains statement for one of my mutual funds.

However, I am a little bit confused regarding the LTCG amount which I should declare in my ITR-2.

Under Section C, the 'long term without index' is Rs 16,714.55. But when declaring LTCG, I have to mention 'Indexed LTCG' based on the year of investment.

  1. Please let me know how I need to calculate this amount. Should the indexed LTCG amount be declared in ITR-2 or Rs 16,714.55?
  2. If indexed LTCG has to be declared, why is that mutual fund AMC do not provide it in the statement?

I once again thank you for your time.

Anil Rego: Since you have not provided details of the underlying transaction, it is difficult to accurately respond.

It is likely that the capital gains are from an equity fund. It may be noted that there is no indexation for capital gains from equity which is why the report captured it as 'long term without indexation'.

Indexation is applicable only if capital gains are from non-equity funds.

 

Murali Sangeetha: Hope your team is safe and well.

It's wonderful that you all are providing not only news but beneficial interface to the Rediff audience with experts from different facets of life.

I have some queries for Mr Anil.

1. I understand that any remittance, including tuition fees payments, to foreign countries from India should be within Rs 7 lakh and once it crosses this limit, then the excess amount will be taxed at 5 per cent as TCS. Am I right?

2. Also, I understand if the same tuition fee is paid from a student loan taken, then it will be taxed at 0.5 per cent as TCS. Am I right?

3. Finally, can each earning and income tax paying parent pay half of the international university fees for their child from their individual accounts, so that both stay within Rs 7 lakhs limit of foreign remittance allowed tax free?

Hope you can guide us and help. This will be really useful for us to plan.

Thank you in advance for your help.

Anil Rego: Going pointwise...

1. Yes, you are right.

In case Aadhar or PAN is missing, the TCS would be 10 per cent.

I would like to add that it is only Tax Collected At Source and it is not tax in itself.

You can set off this TCS for your tax liability from your other sources of income.

2. Yes, this is right. It can go up to 5 per cent, if PAN is not provided.

3. Yes, TCS is applicable at a PAN level. So, you can transfer up to Rs 7 lakhs each without TCS being applicable.

 

Delrun Gonsalves: I enjoy reading your posts answering all the tax queries.

I need your expert advice.

I am an NRI. I invest in stocks and mutual funds. Recently in July and August 2021, I switched three equity mutual funds from regular to direct schemes. As a result, a total of Rs 24,000 was deducted as TDS on LTCG @ 10 per cent.

I want to know if I can reclaim the TDS deducted. I do not have other income in India except for interest earned on NRE FDs which is exempt from tax. I am also receiving some dividends on shares but that is of nominal value.

I have never filed my ITR earlier as my income in India has always been below the taxable limit.

I would appreciate if you could answer my tax query.

Anil Rego: Unlike residents, an NRI does not have the option to adjust capital gains against the basic exemption limit of Rs 2.5 lakh. Hence, you cannot claim the TDS.

There are options to avoid double taxation by claiming tax relief if India has signed the Double Taxation Avoidance Treaty (DTAA) with the country of your residency.

 


Do you have any personal income tax query? Please mail us at getahead@rediff.co.in with the subject line 'Ask Anil' and Anil Rego will answer all your tax queries.

Anil Rego is the founder and CEO of Right Horizons, an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.

You can find more of Mr Rego's answers here.

Feature Presentation: Ashish Narsale/Rediff.com

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