NRIs Dividend versus LTCG tax rates

21

Please refer section 115A of the Income Tax Act. The rate is applicable for a non-resident (not being a company) or a foreign company.

22

Thank you Rahil. Itā€™s quite clear now, as DDT has been abolished in April 2020, all dividend income is taxable for NRI @20%++.

Appreciate your help!!

23

This discussion regarding taxability regardless of slab is confusing. Iā€™m an NRI, and I did get some dividends (around 1 lakh INR last FY). My only income in India is dividends. My PAN is updated as NRI as well, and also my bank account, Demat account. I did file the returns as NRI (selected form ITR-2 which is for NRIs). The income declared is as dividend income. I did get a complete refund of the 20% tax deducted.

How come this wouldā€™ve happened if taxability for NRI is 20% regardless of slab?

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24

Ok. Now this is interesting.
Is your source of dividend from domestic Indian companies or from any INVITs?

25

It is all from domestic Indian companies. Iā€™m wondering if I did some mistake, I used cleartax. I strongly remember declaring it as dividend income from each company in a list, while the portal auto fetched TDS deducted from TRACES. Wondering why if an assessor wouldnā€™t know my NRI status and also TRACES information where it should be apparent that all TDS deducted is on dividend income. ChatGPT answers the same as in this thread, that slab rate is not applicable for tax deducted on dividends for NRIs.

26

You have to go to special income section to declare dividend from equity in case of NRI. your filed return is erroneous. As long as there is no notice you can be fine, but next year declare it under special income

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27

Dividends earned by a non-resident should not be shown as normal dividend income. Non-residents have to show it under special income category. In case DTAA benefit is availed, then it has to be reported under DTAA income.

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28

Going by the same analogy, I guess even the dividend received from mutual fund would have same 20%+ tax slab without any deductions for any NRI?

29

Yes. That is correct.

30

What if shares held under NRO account & not from NRE account?

31

Donā€™t understand your query here. NRO and NRE accounts are types of bank accounts for non-residents and do not have anything to do with shares or demat account or dividends received.

If you are implying a situation where dividends are credited in NRO / NRE account, then it does not make any difference at all as far as taxation is concerned.

Also, I doubt dividends can be credited directly to NRE account. It can only be credited to NRO account as per my understanding. Tax paid monies can thereafter be moved from NRO to NRE account.

Separately, bank interest earned on NRO account is taxable but interest credited to NRE account is exempt.

32

It all depends upon the type of Demat account u have - All my dividends are credited NRE account.

Guys donā€™t make things complicate

  • If u are not sure - Spend some time and read up
  • TDS - Tax deducted at Source is not the same as Taxation
  • Taxation depends upon your type of Income - Short term and Longterm and Total Income including Dividends
  • Take professional help from CAā€™s

With due respect - I hope we have enough discussion on here - Please spare this thread with opinions, Only share/add valuable feedback

Thank you for your Under Standing

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