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%.

Tax deducted at Source for NRI

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.

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%