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Financial Planning and NRI Planning

NRI Taxation

Tax planning is the most important part for any investor as it reduces the profits which one has earned and hence most investor worry the most.

With respect to NRI's its becomes even more important has they have to deal with taxation norms of 2 countries ie. INDIA as well as country where they reside.

Though India has signed DOUBLE TAXATION Avoidance Treaty (DTAA) with most of the countries still NRI's worry that they would not have to pay double taxes.

Generally every indian has to pay tax on various income earned within indian territory and same is true for NRI's also . Income can be anyone of the below (Some example given) and they have to pay tax

  • Income Arising from business connection in India
  • From Sale of property in India
  • Salary received for any services rendered in India
  • From dividend received from shares in Demat Account, by an Indian company
  • Arising from interest received

Taxation in case of Mutual funds
  • Equity mutual funds:
    1. Short-term capital gains (holding period less than 1 year): 15%.
    2. Long-Term Capital Gains (LTCG) - Holding Period greater than 1 year: If income exceeding Rs 1 lakh a year, than tax rate: 10%.
  • Debt Mutual funds:
    1. Short-term capital gains (Holding period less than 3 Year) : 30%.
    2. Long-Term Capital Gains (LTCG) - Holding Period greater than 3 year: 20% tax on the gains with indexation benefit . LTCG on non-listed funds will be taxed at the rate of 10% without indexation.