NRI - TDS on redemption of Mutual Funds??

Will TDS be deducted on the redemption of units? If yes what will be the basis of deduction of TDS.



 i) Resident Investors TDS is not deducted on the sale proceeds for Resident Indians. As per Central Board of Direct Taxes (CBDT) Circular No.715 dated 8th August 1995, in case of resident unit holders, no tax is required to be deducted from capital gains arising at the time of redemption of the units.

ii) Non-Resident Investors
In case of NRI's, TDS will be deducted on the sale proceeds. The TDS will deducted depending upon whether it is a short-term capital gain or long term capital gains.

TDS For Equity Funds for NRI

Long-Term Capital Gains on Equity Funds :
No tax is deductible from the proceeds payable to non-resident investors from long-term capital gains arising out of redemption of units of an equity-oriented fund.

Short-Term Capital Gains on Equity Fund
s As per Part II of the First Schedule to the Finance Bill 2010 {Clause 1 (b) (i) (C)}, the mutual fund is liable to deduct tax at 15% on short-term capital gains. The TDS is to be increased by applicable surcharge.
Illustration: 
TDS rate for Short Term = 15% (A)
Surcharge = A x10% = 1.5% (B)
Education Cess = A + B x 3% = 0.495% (C)
TDS to be deducted = A + B + C = 16.99%

TDS  For Non Equity Funds (Debt, Gold ETF fund) for NRI


Long-Term Capital Gains 
TDS rate = 20% with indexation benefit. (A)
Surcharge = A x 10% = 2% (B)
Education Cess = A + B x 3% = 0.66% (C)
TDS to be deducted = A + B + C = 22.66%

Short-Term Capital Gains


TDS rate = 30% (A)
Surcharge = A x 10% = 3% (B)
Education Cess = A + B x 3% = 0.99% (C)
TDS to be deducted = A + B + C = 33.99%