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Capital Gains on Securities for NRIs – N.D. Savla & Associates
For Non-Resident Indians (NRIs), buying and selling securities such as shares, mutual funds, debentures, and bonds in India attracts capital gains tax. The rate of taxation depends on whether the securities are held short-term or long-term, and whether the transaction is executed through recognized stock exchanges under NRI Portfolio Investment Schemes (PIS). At N.D. Savla & Associates, we provide comprehensive guidance on NRI capital gains taxation on securities, ensuring proper computation, compliance, and optimization.
Overview
When NRIs invest in Indian securities, profits made at the time of sale are treated as capital gains. These are classified into:
Short-Term Capital Gains (STCG): Sale within 12 months (for listed shares/equity funds) or 36 months (for debt funds, unlisted shares).
Long-Term Capital Gains (LTCG): Sale after 12/36 months, with indexation benefits for certain assets.
Special tax rates apply under Section 115E of the Income-tax Act, and exemptions may be available through DTAA with the country of residence.
Features
Computation of short-term and long-term capital gains on securities
Application of special concessional rates for NRIs under Chapter XIIA
Assistance in claiming exemption for reinvestments (e.g., Section 54EC bonds)
DTAA advisory to avoid double taxation
TDS review and refund assistance for excess deductions by brokers or banks
FEMA compliance for NRI security transactions through NRE/NRO accounts
Documents Required
Passport & PAN card
Demat account statements
Portfolio Investment Scheme (PIS) statements from banks
Contract notes for share/mutual fund transactions
Bank account statements (NRE/NRO)
TDS certificates (if tax deducted by broker/bank)
Proof of reinvestment (if claiming exemptions)
Procedure
Transaction Review – Collect contract notes, Demat/PIS statements.
Classification – Determine STCG or LTCG based on holding period.
Computation – Apply indexed cost for LTCG where eligible, and concessional rates under Section 115E.
Exemption Planning – Suggest reinvestments in notified bonds or properties to save tax.
TDS Adjustment – Reconcile tax deducted by banks/brokers with final liability.
ITR Filing – File NRI ITR with detailed capital gains schedules.
Refund Assistance – Claim refunds where TDS exceeds actual liability.
Why This Matters
Incorrect computation or missed exemptions on NRI securities transactions can result in excessive tax or blocked refunds. With N.D. Savla & Associates, your capital gains on securities in India are calculated accurately, exemptions are maximized, and compliance is ensured under the Income-tax Act, FEMA, and DTAA.
