NRI Mutual Fund Tax Calculator

TDS = gain × rate + surcharge + cess, withheld BEFORE payment and WITHOUT the ₹1.25L exemption. Refund = TDS − actual liability, claimed by filing.

Section 195 requires a fund house to withhold tax on any redemption paid to a non-resident, which is the single structural difference from a resident's position: a resident settles up when filing, while an NRI has the money taken before it is paid out. The rates themselves are largely the ordinary ones — long-term equity at 12.5% under section 112A, short-term equity at 20% under section 111A, non-equity long-term at 12.5% without indexation, all with surcharge and 4% cess on top, and surcharge on capital gains capped at 15% however high total income goes. What differs is that the withholding is computed on the redemption in front of the AMC, with no sight of the investor's year, so it is routinely larger than the liability. Two independent mechanisms cause that. The ₹1.25 lakh annual exemption under section 112A cannot be applied at source, because the fund house has no way of knowing how much of that shared allowance has already been used elsewhere, so it deducts on the whole gain — an NRI whose only gain for the year is ₹1 lakh has no liability at all and still has tax withheld. And a non-equity short-term gain, which is charged at the investor's own slab, is withheld at 30%, the maximum marginal rate, because the AMC cannot know the bracket. Neither is an error; both leave money that comes back only by filing an Indian return and claiming a refund, and an NRI who does not file loses it permanently since nothing in the system corrects it unprompted. One difference is not recoverable and belongs in a different category. A resident individual whose other income falls short of the basic exemption limit may set the shortfall against capital gains, but the provisos to sections 111A, 112 and 112A that allow this each say "being a resident", so a non-resident cannot. That is a permanently higher liability on identical figures rather than a withholding gap. It does not arise on a gain charged at slab rather than at a special rate, where the ordinary brackets reach resident and non-resident alike. A tax treaty can displace the Indian charge entirely where it gives the taxing right on units to the country of residence. That entitlement does not depend on paperwork, but the withholding does: without a Tax Residency Certificate and Form 10F in the AMC's hands before the redemption is processed, the domestic rate is deducted and the treaty relief is obtained as a refund rather than as a smaller deduction.