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

 

Whether TDS is applicable on repurchase/sale of mutual fund units??

Tax Deducted at source is applicable only for NRI mutual fund Investors. In case of Resident Indians, TDS is not deducted on the sale proceeds of mutual fund.
 

TDS for NRI 

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

 

@ after providing for indexation
## Subject to NRI’s having Permanent Account Number in India
*STT @ 0.25% will be deducted on equity funds at the time of redemption and switch to the other schemes.
Mutual Fund would also pay securities transaction tax wherever applicable on the securities bought/sold.
^Assuming the investor falls into the highest tax bracket
# The total income of the corporate would exceed Rs. 1 Crore
** The tax rates are subject to DTAA benefits available to NRI’s
*** These are the tax rates applicable to capital gains, in case the rate of tax is lower than 20% and if the NRI does not have a Permanent
Account Number, then for the purpose of TDS, the withholding tax rate would be 20%.