On Dec 10, 2021, in reply to a question by an NRI on claiming refund of TDS on capital gains, you have relied 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.” 

While your reply (on basic exemption limit) is correct, I believe NRIs can still claim LTCG exemption up to Rs.1 lakh on sale of shares/equity Mutual funds. Please confirm.

Ans: 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.

 

Ans: Yes, NRIs can claim refunds on the deducted TDS. For an NRI to claim a refund on the TDS deducted, he/she must compute their income and tax liability according to existing slab rates and file your IT Returns accordingly.

If there is a refund due as per the returns, it will be paid out to you after processing by the IT Department.

Ans: In respect of capital gains you can claim exemption from long term capital gains if the net sale consideration is invested in booking an under construction house. You get an extended period of three years to get possession in case it is booked with a developer.

In case the sale consideration is not fully invested in the residential house before filing of the Income Tax Return, the unutilised money has to be deposited with a bank under Capital Gains Account Scheme. The money deposited can be utilised within the prescribed period for payment of house.

You have to keep in mind that to claim this exemption, you should not own more than one residential house property on the date of sale of the shares except the one in respect of which you are claiming the exemption.

So once you claim exemption in FY 22 23, it is not advisable to claim exemption against gain earned in subsequent years.

In Income Tax Return, you can show the amount invested in property as exemption u/s 54F and if the entire 10 lakh consideration can not be invested in property then open CG account and show amount in ITR accordingly.

Ans: I'll address your inquiries about TDS and capital gains tax for NRIs selling stocks and redeeming mutual funds:

Stocks (Held for More Than 1 Year):

Taxable: Yes, profits from selling stocks held for over a year are considered long-term capital gains (LTCG) and are taxable in India for NRIs.
TDS: The stock broker will deduct TDS at 10% of the LTCG amount.
Tax Rate: The actual tax liability on LTCG exceeding ?1 lakh (approx. $1,235) is 10% without indexation (inflation adjustment). This means you may be due a refund if your total tax liability is below 10%.
NRE Account: Holding the stocks in your NRE account doesn't affect the taxability.
Mutual Funds:

Tax Treatment: The tax treatment for mutual fund redemptions by NRIs depends on the type of fund:
Equity-Oriented Mutual Funds (Equity & Equity-Linked Savings Schemes):
Short-Term Capital Gains (STCG): Gains from redemptions within 1 year are taxed at 15% with TDS deducted at the same rate.
LTCG: Gains from redemptions after 1 year are taxed at 10% on gains exceeding ?1 lakh, with TDS deducted at 10%.
Debt-Oriented Mutual Funds: Gains are considered income from other sources and taxed at a flat rate of 30% with TDS deducted at the same rate.
Recommendations:

Calculate Your Tax Liability: To determine if you'll owe additional tax or are eligible for a refund, calculate your total LTCG and factor in the TDS deducted.
File an Income Tax Return: Even if your tax liability is less than the TDS deducted, consider filing an Indian income tax return to claim any potential refund.
Consult a Tax Advisor: For personalized advice specific to your situation and to explore potential tax-saving options, consult a qualified tax advisor specializing in NRI taxation.
Additional Notes:

You can claim exemptions under relevant sections of the Income Tax Act (e.g., Section 54EC for reinvestment in specific bonds) to reduce your tax liability.
TDS is a mechanism to collect tax upfront, but it doesn't represent your final tax obligation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: 01. As per details provided of the Income, your total Income is not below Taxable Limits & you shall pay tax, as per calculations.
02. However, you should also check tax calculations as per new regime. This is not possible for me, since you have mentioned your annual income after deductions.
Most welcome for any further clarifications. Thanks.
02.