Long term capital gain tax on gold mutual funds- NRI Investment

Query of Blog Reader:

I shall appreciate if you could let me know what is long term capital gain tax on gold saving mutual fund. XXXXX MF have deducted 22% on the gold mutual fund I sold after 1 year of possession. Which method they should follow 11% or 20% with indexation. I had them for 1 year 12 months. What indexation they should apply? Hope to hear soon from you

After reading your query it seems you tax status is NRI as tax is deducted at source.

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.

 

The tax system for Gold Savings Fund or Gold ETF is similar to that of non-equity mutual funds like debt funds. When computing income tax, gold exchange traded funds are treated as debt funds.

How is TDS calculated for NRI Investment ?

 Long Term Capital Gain Tax on Gold mutual Funds for NRI 

TDS rate for Long Term NRI investor's under Non-Equity Scheme(s) = 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%

 

 TDS rate for Long Term NRI investor's under Equity Scheme(s) = NIL

 

How is TDS calculated for NRI Investment ?

TDS rate for Short Term NRI investor's under Equity Scheme(s) = 15% (A)
Surcharge = A x 10% = 1.5% (B)
Education Cess = A + B x 3% = 0.495% (C)
TDS to be deducted = A + B + C = 16.99%

TDS rate for Short Term NRI investor's under Non - Equity Scheme(s) = 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%

TDS rate for Long Term NRI investor's under Equity Scheme(s) = NIL

TDS rate for Long Term NRI investor's under Non-Equity Scheme(s) = 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%

What else you should know about TDS for NRI's

Interest on bank deposits Tax Free so No TDSInterest earned on Non Resident External (NRE) accounts and Foreign Currency Non Resident (FCNR) accounts are tax free in India. Hence, there would be no TDS.

Interest on all other investments

• Capital gains on securities 

Equity shares and equity mutual funds (mutual funds with more than 50 per cent in equities)

Long term capital gains, that is profits made on sale after 1 year from date of purchase, on
equity shares and equity mutual funds are exempt from tax. There will be no TDS applicable.

Short term capital gains, that is, profits on sale within one year of date of purchase, will be
subject to a TDS of 15 per cent.

Also Refer:Form 15G or Form 15H

•   Debt mutual funds, corporate debentures

Long term capital gains from debt mutual funds and corporate debentures (when sold in the secondary market) will be subject to TDS at 10 per cent.

Short term capital gains will be subject to a TDS of 30 per cent.

• Capital gains on other assets like house property, gold

Long term capital gains will be subject to a TDS of 20 per cent.

Short term capital gains will be subject to a TDS of 30 per cent.


Dividends

Dividends from equity shares, equity mutual funds and debt mutual funds are exempt in the hands of the share or unit holder.