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NRI

TDS CALCULATION

  • Government of India has introduced changes in Capital Gain Tax Rates vide Finance Act 2024 which are effective from July 23, 2024.
  • Profits or gains arising from transfer of capital assets are called "capital gains".
  • Therefore, the payout of sale proceeds of securities by Non Resident clients will be in accordance to applicability of revised Long Term Capital Gain ('LTCG’) and Short Term Capital Gain (‘STCG’) tax structure.
  • LTCG refers to gains arising out of sale/transfer of listed securities In India held for more than 1 year and for all other assets it is 2 years. Gains from listed securities in India held for less than 1 year and 2 years in case for all other assets are called as STCG.
  • Below are the TDS rates applicable for operative NRI PANs w.e.f 23rd July 2024.
  • As per Section 206AA, for inoperative PANs, tax rate applicable will be 23.92% TDS (Tax 20% + Surcharge 15% +Cess 4%) or applicable TDS rates whichever is higher.There will be no change in TDS on F&O contracts which will continue to be deducted at 42.74 %
*Class of Capital Asset Holding Period for Long Term
Tax rate***
Long Term Short Term
Listed equity shares or equity oriented mutual funds/ Listed units of business trust (REITs and InVITS) > 12 months 14.95% 23.92%
Equity ETF’S > 12 months 14.95% 23.92%
Listed Bonds/Debentures/Pref. Shares > 12 months 14.95% 42.74%
Unlisted Equity & Preference shares/Foreign Shares > 24 months 14.95% 42.74%
Units of debt oriented mutual funds* Always Short Term 42.74%
Unlisted Bonds/Debentures ** Always Short Term 42.74%
Debt ETF’S Always Short Term 42.74%
Futures & Options 42.74%

* Debt funds purchased prior to 1st April, 2023 having holding period > 36 months taxable at the rate 20% without indexation benefit.

** Unlisted Bonds and Debenture sold prior to 23rd July, 2023 having holding period > 36 months taxable at the rate 20% without indexation benefit.

***Tax rates are inclusive of surcharge and cess

Maximum rate of surcharge has been assumed. i.e Where capital gain tax rates is 12.5%/20% - surcharge rate is 15% and where capital gain tax rate is 30% - surcharge rate is 37%

How is LTCG calculated?

  • LTCG
  • =
  • Sale price of the asset
  • -
  • Cost of Acquisition of asset

(The long-term capital gains will be computed by deducting the cost of acquisition from the full value of consideration on transfer of the long-term capital asset.)

The cost of acquisitions in respect of the long term capital asset acquired by the assesse before the 1st day of February, 2018, shall be deemed to be the higher of:

  • the actual cost of acquisition of the asset
    • OR
  • the lower of
    • The fair market value of this asset (highest price of share on stock exchange on Jan 31, 2018 or when share was last traded. NAV of unit in case of a mutual fund unit and
    • The sale value received/accrued as a result of the transfer of the capital asset

To Know how LTCG Tax is calculated

Click Here

Frequently Asked Questions

You will have to update your Resident Status with the Income Tax Dept. This can be done by submitting an application to your Jurisdictional Assessing Officer (JAO), details of which you can find in your Income Tax portal. You will have to send them copy of your PAN and copy of your passport showing period of residence outside India so that your status can be updated in the PAN database.

OR

Apply for an Aadhaar card and link it to PAN. You can take an appointment online, however biometrics will require physical presence in India at the Aadhaar Kendra. Once Aadhaar card is issued, kindly link it to PAN

Yes, losses can be offset against profit, there can be four possible scenarios, Click here for more details.

If Bonus shares are credited after January 31, 2018, then Cost of Acquisition will be considered as ZERO. If Bonus shares are held as on January 31, 2018 then Cost of Acquisition will be considered at Fair Market Value (FMV)

TDS Calculation from PINS Account

TDS settlement is done when shares are purchased and sold from PINS A/c in normal T+2 days.

TDS Calculation from NON-PINS Account

No Action required if

  • The shares being sold were purchased from your ICICIdirect account when your status was Resident Indian. In this scenario, the details required for TDS calculations will be available with ICICIdirect. The appropriate LTCG or STCG will be deducted and pay-out will be credited in your bank account in T+2 days. There is no actionable required from your end. You may accept and proceed to sell the shares.
  • The shares being sold are bonus shares transferred from your ICICIdirect PINS to NON PINS account.
  • The shares being sold were purchased under IPO through ICICIdirect.

Documentary proof required if

If the shares being sold were transferred from another DP, for example:

(shares received as a gift from a Resident Indian or your entire portfolio was migrated from another DP. In such a case the details required for calculating TDS will not be available with ICICIdirect.)

You will be required to furnish below documentary proof and send a soft copy to nri@icicidirect.com

  • Demat holding statement of the DP from where the shares have been transferred to your ICICI Bank DP. This is to ascertain the period of holding to apply LTCG or STCG. The demat statement should also have the repatriation proof details for cases where pay-out is to be given in NRE account.
  • Cost of acquisition (COA) details of the shares being sold like contract notes. If the COA details are not available with you, ICICIdirect can consider Fair Market Value (FMV) as on Jan 31, 2018 given that shares were purchased prior to that period and documentary proof of period of holding is submitted.
  • In scenario of sale of ESOPs, the below documents are required to be submitted:
    ESOP allotment letter from company registrar
    Details of perquisite tax payment made in India or foreign country if any

Under Employee Stock Ownership Plan (i.e. ESOP) employers offer their employees the stock of the company at a discounted rate. Exercising ESOPs is an option and not an obligation for the employees of a company. NRI employees are offered ESOPs by their company/holding company and they can exercise them using NRE or NRO funds under the Non PIS transaction category.

As NRIs can exercise ESOPs using both NRE or NRO funds, however ESOP transactions come under Non PIS category, therefore NRIs must ensure to provide the demat account number linked to NRE NON PINS or NRO NON PINS trading accounts depending on what source of funds (NRE/NRO) was used for exercising the ESOPs. NRIs should ensure the right demat account number is provided to company for ESOPs to be allotted into.

Upon sale of ESOPs by NRIs, an obligation for tax deduction i.e. TDS on capital gain arises. In order to comply with this, broker need to procure certain documents from NRIs to calculate the Cost of Acquisition (COA), know the source of funds and the holding period of ESOPs. In order to satisfy these requirements NRIs should ensure to provide the below documentary proofs -

1. ESOP allotment letter on Company Letterhead which contains details of allotment date and Exercise price
2· Details on Perquisite tax payment details if any in India or foreign country
3· If you have transferred the ESOPs from another DP in ICICI DP, then NRIs need to provide chain trail of demat transaction statement from the date of ESOPs allotted until the date of transfer of ESOPs into ICICI DP

The above proofs can be sent on email to nri@icicidirect.com

In case of Sale of ESOP shares by NRIs, if the perquisite tax is not paid in INDIA then Exercise price will be considered as cost of acquisition and accordingly tax will be deducted as per applicable rates.

Perquisite Tax paid in India Perquisite Tax paid in Foreign Country
Cost of Acquisition FMV on date of exercise Exercise Price
Tax rate
14.95% long term 14.95% long term
23.92% short term 23.92% short term
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