FY 2025–26  ·  AY 2026–27

Mutual Fund Capital Gains
& TDS: NRI vs Resident

How redemption gains and dividend payouts are taxed differently for Non-Resident Indians compared with Resident investors.

Resident Rate
NRI Rate / TDS
Equity-Oriented MF
Held > 12 months
Resident (LTCG)
12.5%
NRI Rate
12.5%
TDS on NRI
12.5% deducted at redemption
Both Resident and NRI investors pay 12.5% above the ₹1.25 lakh/yr exemption — no TDS for residents, but NRIs face TDS at source on the full gain.
Equity-Oriented MF
Held < 12 months
Resident (STCG)
20%
NRI Rate
20%
TDS on NRI
20% deducted at redemption
Short-term equity gains are taxed at a flat 20% with no exemption threshold — residents self-pay via ITR, NRIs have it withheld upfront.
Debt / Non-Equity MF
Any Period
Resident Rate
Slab
NRI Rate
Slab
TDS on NRI
~30% withheld (adjustable on ITR filing)
Gains are added to income and taxed at applicable slab rates for both. Residents generally see no TDS, while NRIs face a steep ~30% withholding — refundable via ITR if actual slab liability is lower.
Dividend Payout
All Funds
Resident Rate
Slab
NRI Rate
Slab
TDS on NRI
20% (+surcharge/cess) from ₹1
Residents see 10% TDS only above ₹10,000/yr; NRIs face 20% TDS (plus surcharge & cess) from the very first rupee of dividend income.
Sources: Income Tax Department, Government of India (incometaxindia.gov.in); Finance Act 2024 & 2025 amendments as compiled by Tata AIA, InvestMates, WealthMunshi and Anand Rathi tax guides (2026). Rates exclude surcharge/cess. Consult a tax professional for your specific situation.