I’ve been a non-resident Indian (NRI) for a few years and have invested in Indian shares utilizing earnings earned overseas, deposited in my NRE account. In FY25, I bought some shares and made capital good points, however my AD (approved seller) banker deducted TDS on the good points. I assumed earnings from NRE accounts was exempt from tax, so why was TDS utilized?
-Identify withheld on request
Any fee made to NRI pursuant to taxable earnings earned by such particular person is topic to TDS underneath part 195. Whereas curiosity earned on NRE (non-resident exterior) financial savings accounts is tax-exempt, this exemption applies solely to curiosity earnings, to not capital good points from the sale of investments made utilizing an NRE account.
Regardless that the funds used to purchase the shares got here out of your NRE account, the capital good points from promoting these shares are handled individually from the curiosity earnings exemption for NRE accounts. Consequently, NRIs are chargeable for TDS on capital good points from their investments in India, and AD bankers should deduct the suitable tax when these investments are bought.
Nevertheless, if extra TDS has been deducted, you may file an earnings tax return in India to say a refund.
I’m an NRI. I need to spend money on Indian share market from my abroad earned earnings. My banker suggested me to open a non-PINS account linked to my NRO account. I need a steerage on this.
-Identify withheld on request
For NRIs considering investing within the Indian inventory market, there are two important funding accounts: PINS (portfolio funding scheme) accounts linked to NRE accounts, and non-PINS accounts linked to NRO (non-resident extraordinary) accounts.
PINS is designed to permit NRIs to spend money on the Indian secondary inventory market (shopping for and promoting shares of listed corporations) utilizing funds from their abroad earnings by way of NRE account. An NRI can keep just one PINS account with an AD financial institution at any given time. Since PINS is linked to an NRE account, each principal and earnings will be repatriated freely with out limits.
However, non-PINS accounts linked to NRO haven’t any restrictions on the quantity that an NRI can open, permitting for better flexibility for making investments in India. Nevertheless, the principal and earnings are topic to $1 million repatriation restrict per monetary yr.
Harshal Bhuta, companion, P. R. Bhuta & Co. CAs
