Capital Gains Tax for NRIs: Key Differences from Resident Indians

1. Tax Rates: Both NRIs and residents are subject to the same capital gains tax rates, which are classified into short-term and long-term capital gains. The applicable tax rates are deducted accordingly.

2. Payment Timing:

• NRIs: Taxes on capital gains are deducted at the source at the time of the transaction, meaning NRIs must pay taxes upfront.
• Residents: Taxes are paid when filing annual tax returns, giving residents more flexibility in payment timing.

3. TDS (Tax Deducted at Source):

• NRO Transactions: Navia offers a specialized service of deducting taxes at the source at zero cost. This ensures that NRIs meet their tax obligations without additional charges.
• NRE Transactions: The bank where the PIS (Portfolio Investment Scheme) account is held deducts the applicable taxes at a nominal rate.

TDS Application for NRO Accounts by Navia

When you open a Non-PIS (Non-Permissioned Investment Scheme) NRO account, Navia is responsible for deducting Tax Deducted at Source (TDS) on applicable capital gains in stock market transactions. Here's a breakdown of the TDS rates:

• Short-Term Capital Gains (STCG): For stocks sold within 365 days, Navia deducts TDS at a rate of 23.92%, which includes a 20% STCG, a 15% surcharge, and a 4% cess.

• Long-Term Capital Gains (LTCG): For stocks held longer than 12 months, Navia deducts TDS at 14.95%, consisting of a 12.5% LTCG, a 15% surcharge, and a 4% cess.

• Speculative Capital Gains (STCG): For speculative transactions, Navia deducts TDS at a rate of 35.88%, comprising a 30% STCG, a 15% surcharge, and a 4% cess.

Note: TDS will not be deducted if there is a loss when shares are sold. If you do not accrue any LTCG or STCG, TDS can be claimed back while filing tax returns. For tax-specific queries, consult a tax professional or Chartered Accountant (CA).

For more detailed tax information, click here.