After the NRI application is flagged, capital gains are determined. The tax liability is determined based on holding period (long term or short term capital gains) and type of scheme (debt or equity).
For resident Indians, TDS is applicable at 10 percent for all dividends, both in equity and debt schemes. There is no TDS on re-purchase proceeds to resident investors.
Dividend income (in respect of units of a mutual fund) below Rs. 5,000 in a financial year is exempt from TDS. In case, PAN is not available or is not submitted, the TDS rate shall be 20 percent.
For non-resident Indians (NRIs), TDS shall be at 20 percent of the dividend amount.
Securities Transaction Tax (STT) refers to the tax that has to be paid at the time of redemption or switch to other schemes or sale of units of equity oriented mutual funds, whether sold on stock exchange or otherwise.
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