In case you as a resident Indian had investments in mutual funds and stocks but due to some employment opportunity or for pursuing some business overseas you need to move out of India then still you can remain invested in these investment. At the same time you are also allowed to trade in these through a non-resident demat account.
For this your existing resident demat account shall be closed and the securities and mutual fund folio shall be transferred into the new non-resident or NR demat account. But for the same to effect, you need to inform the concerned bank about the change in your residential status.
So, while being an NRI when you trade in your investments in stocks and mutual funds via NR demat account, following rules of taxation apply which also are applicable in case you happen to liquidate your investments in them when in you are still in India.
1. For shares that are listed on recognized stock exchange in India and are held for over a year for taxation purpose will be classified as long term. Further, no long term capital gains tax applies on the sale of such securities as these are tax-exempt provided securities transaction tax or STT is payable on these.
For shares which are sold prior to one year, short term capital gains tax @ 15% including surcharge if any and cess is payable.
2. Taxation rules on equity mutual funds if held for over 12 months or in the other case if held for less than a year are same as equity or company stocks.
3. For debt or non-equity mutual funds, if units are held for over 3 years are considered as long term assets and tax on sale of these @ 20% after providing indexation benefit plus surcharge if any and cess is payable. Short term capital gains tax applies in accordance with the slab rate of the individual.