NRI investing in Indian stocks? Know about TDS on capital gains

Investing in Indian stocks as a Non-Resident Indian (NRI) involves specific rules and tax requirements. NRIs can invest in Indian markets through the Portfolio Investment Scheme (PIS) and can hold assets in either Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts.

When it comes to taxation, capital gains are taxed differently depending on the holding period. For short-term gains on listed equity, NRIs incur a 15% tax, while long-term gains (over one year) are taxed at 10% without indexation benefits. TDS (Tax Deducted at Source) applies to capital gains, requiring NRIs to manage these deductions at the time of transactions. NRE accounts offer tax-free interest and are repatriable, while NRO accounts are subject to taxes in India and allow limited repatriation.

NRIs must also comply with regulations regarding currency conversion and may benefit from consulting tax professionals familiar with cross-border finance to optimize tax efficiency and ensure regulatory adherence.

Source: livemint.com