TDS

What is the Tax Deducted at Source (TDS) rate applied to Mutual Funds? If I'm subject to a 15% TDS rate for Short-Term Capital Gains (STCG) on equity and I belong to the 0% tax slab, can I receive a refund?

Regarding TDS for Mutual Funds in the context of Non-Resident Indians (NRIs),the taxation process involves pre-taxing gains before they are credited to the NRI's bank account.

For non-residents, the basic exemption limit is applicable only to income that falls under the regular slab rates for individuals. Short-Term Capital Gains (STCG) from listed equity shares and equity-oriented mutual funds are subject to a special 15% tax rate, regardless of the individual's tax bracket. NRIs are not allowed to apply the basic exemption against such income. Consequently, NRIs are obligated to pay tax on such earnings at the 15% rate, irrespective of their tax slab. This tax is withheld at the source and is non-refundable to NRIs.

Mutual fund investments made by NRIs are subject to TDS deductions in India. The TDS rate for Long-Term Capital Gains (LTCG) is 20% for debt and other non-equity funds.