NRI CORNER
- WHO IS NRI ?
- PERSON OF INDIAN ORIGIN (PIO)
- OVERSEAS CITIZEN OF INDIA (OCI)
WHO IS NRI ?
Any person holding Indian passport who has left India for an indefinite period for the following purposes:
Any person holding Indian passport who has left India for an indefinite period for the following purposes:
- Employment
- Business
- Any other purpose
PERSON OF INDIA ORIGIN
A Person of Indian Origin means a citizen of any country (other than Bangladesh or Pakistan), if:
A Person of Indian Origin means a citizen of any country (other than Bangladesh or Pakistan), if:
- He at any time held an Indian passport; or
- He or either of his parents or grand parents was a citizen of India; or
- He is a spouse of an Indian citizen, or of a person referred to in (I) or (II) above.
OVERSEAS CITIZEN OF INDIA (OCI)
A foreign national, who was eligible to become citizen of India on 26.01.1950 or was a citizen of India on or at anytime after 26.01.1950 or belonged to a territory that became part of India after 15.08.1947 and his/her children and grand children, provided his/her country of citizenship allows dual citizenship in some form or other under the local laws, is eligible for registration as Overseas Citizen of India (OCI). Minor children of such person are also eligible for OCI. However, if the applicant had ever been a citizen of Pakistan or Bangladesh, he/she will not be eligible for OCI.
A foreign national, who was eligible to become citizen of India on 26.01.1950 or was a citizen of India on or at anytime after 26.01.1950 or belonged to a territory that became part of India after 15.08.1947 and his/her children and grand children, provided his/her country of citizenship allows dual citizenship in some form or other under the local laws, is eligible for registration as Overseas Citizen of India (OCI). Minor children of such person are also eligible for OCI. However, if the applicant had ever been a citizen of Pakistan or Bangladesh, he/she will not be eligible for OCI.
PRODUCTS OFFERED BY US TO NRI
Note: With effect 08 Dec 2008 “U S Persons and Persons of Canada” will not be allowed to make any fresh purchase/additional purchase/switches in any scheme of Mutual Fund.
- MUTUAL FUNDs
Note: With effect 08 Dec 2008 “U S Persons and Persons of Canada” will not be allowed to make any fresh purchase/additional purchase/switches in any scheme of Mutual Fund.
TAXATION FOR NRI'S ON INCOME FROM MUTUAL FUNDS
For Equity Scheme:
Short Term Capital Gains Is 15%
Long term Capital Gain is 10 per cent
(exceeding Rs 1 lakh in one financial year, provided such units are subject to STT)
Debt Scheme:
Short Term Capital Gains is as per slab
Long term Capital Gain is 20% with Indexation.
TDS: STCG is 30% and LTCG-20 %( After providing for Indexation)
Dividend Distribution Tax
With effect from 1st April 2020, the dividend distribution tax at the company and the mutual fund level have been abolished and the dividend will be taxable in the hands of the investors.
The company will pass on the full dividend to the shareholders which will be taxable in the hands of the investor as per their tax slabs. This move would benefit the NRIs in the lower tax bracket and impact the NRIs in higher tax brackets (more than 20%) who would require to shell out more tax than earlier. One plus point here would be that NRIs can avail of the Double Tax Avoidance Agreement under the new regime (if India has signed DTAA with your residing country) to lower their tax burden. DTAA has dividend withholding tax in the range of 5-15% subject to certain conditions. This would benefit the NRIs in the higher tax bracket by paying lower tax amounts.
However, now the even the mutual fund will credit full dividend proceeds in the investor account without deducting any taxes which would be taxable in the hands of the NRI. With this, the dividend pay-out mutual fund options may become little costlier and complex from the taxability perspective and may shift the focus of mutual fund investment from dividend pay-out options to growth pay-out options to avoid these issues.
For Equity Scheme:
Short Term Capital Gains Is 15%
Long term Capital Gain is 10 per cent
(exceeding Rs 1 lakh in one financial year, provided such units are subject to STT)
Debt Scheme:
Short Term Capital Gains is as per slab
Long term Capital Gain is 20% with Indexation.
TDS: STCG is 30% and LTCG-20 %( After providing for Indexation)
Dividend Distribution Tax
With effect from 1st April 2020, the dividend distribution tax at the company and the mutual fund level have been abolished and the dividend will be taxable in the hands of the investors.
The company will pass on the full dividend to the shareholders which will be taxable in the hands of the investor as per their tax slabs. This move would benefit the NRIs in the lower tax bracket and impact the NRIs in higher tax brackets (more than 20%) who would require to shell out more tax than earlier. One plus point here would be that NRIs can avail of the Double Tax Avoidance Agreement under the new regime (if India has signed DTAA with your residing country) to lower their tax burden. DTAA has dividend withholding tax in the range of 5-15% subject to certain conditions. This would benefit the NRIs in the higher tax bracket by paying lower tax amounts.
However, now the even the mutual fund will credit full dividend proceeds in the investor account without deducting any taxes which would be taxable in the hands of the NRI. With this, the dividend pay-out mutual fund options may become little costlier and complex from the taxability perspective and may shift the focus of mutual fund investment from dividend pay-out options to growth pay-out options to avoid these issues.
