Indian vs NRI Demat Taxation along with DTAA

F&O
1

Hey Everyone,

Can anyone please explain me or point me out to any article on comparison between Indian demat vs NRI demat account in terms of taxation on FnO income especially when the NRI is based out of any tax haven country and India has DTAA treaty with that country?

Thanks

2

Two points which I am aware of are

  1. TDS is collected and paid by the broker when there is a capital gain when you sell and make profit. You can get refund if you file returns if eligible.
  2. As a Non-resident, you still get the benefit of the basic exemption limit of Rs. 2,50,000 from your total income. However, If your total income in India consists of only short term capital gains or long-term capital gains, then the benefit of the basic exemption limit is not available in respect of such gains.
3

So do you mean through NRI demat account we can trade in FnO without paying any tax to Govt. of India if the NRI is based out of any tax heaven country (say Middle East etc.) where India has DTAA?

4

I think I did not read your question clearly. the above is for normal investing and not sure of FNO. I am sure Quciko will respond and answer to your query.

2 Likes
5

@Quicko Can you please help me understand - Can an NRI person get rid off paying taxes to Govt of India on FnO income (by using a NRI demat account) if the NRI person is from tax haven country (e.g.: Middle East) where India has DTAA?

1 Like
6

Hi @sachinsp15

No, an NRI can not get rid of paying taxes to the Government of India as TDS is already deducted from the income before being transferred. An NRI can carry out F&O transactions using INR funds held in NRO Account. An NRI will have to go through the provisions of DTAA (which differs from country to country) to better understand the taxability.