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June 3, 2020

FOR U.A.E. TAX RESIDENTS

  • NO CAPITAL GAINS TAX ON SALE OF MUTUAL FUNDS IN INDIA AND OTHER CONCESSIONS UNDER DTAA.

Under Article 13 of the India-UAE DTAA (Double Taxation Avoidance Agreement), capital gains on sale of Mutual Funds (equity oriented or non equity oriented), either short term or long term and also capital gains on sale of bonds shall be completely tax free in India for persons who are UAE Tax Residents (Persons who have stayed in UAE for more than 183 days in the Calendar Year).

The above interpretation of the DTAA has been confirmed by the following judicial decisions:

  1. ITO (IT) 2(1) Mumbai vs. Shri Satish Beharilal Raheja ITA NO.4627/Mum/2009
  2. The Dy. Commissioner of Income-tax (International Taxation) Kochi vs. Sri.K.E.Faizal ITA No.423/Coch/2018
  • CONCESSIONAL RATE OF TAX IN INDIA OF 10% ON DIVIDEND INCOMES AND 12.50% ON INTEREST INCOMES UNDER DTAA.

Under Article 10 and Article 11 of the India-U.A.E. DTAA (Double Taxation Avoidance Agreement), there is a concessional rate of 10% on dividend income and 12.50% on interest income (including NRO bank account interest) respectively in India for tax residents of U.A.E. (Persons who have stayed in U.A.E. for more than 183 days in the Calendar Year). The same shall also be the rate of T.D.S. (withholding tax) in India.

The above rates are inclusive of all surcharges and cess which is affirmed by the following judicial decisions:

  1. Deputy Director of Income-tax (IT)-1(1), Kolkata v. BOC Group Ltd.
  2. A.K. Ceramics, UAE v. Deputy Commissioner of Income Tax, International Taxation(2), Hyderabad

Kindly contact us in case of any clarification.

Ashutosh NRI services (A division of Ashutosh Financial Services Pvt. Ltd.)

Contact us: +91 70435 93388 / nris2@ashutoshfinserv.com

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Disclaimer: The above facts are based on our interpretation of law. The same should not be relied or acted upon without seeking specific professional advice.

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