Archive · 3 Dec 2025
NRIs Can Avoid Tax on Mutual Fund Gains via DTAA
Non-Resident Indians (NRIs) who live in countries like the UAE or Singapore can avoid paying tax on their profits from Indian mutual funds.
This is because special agreements called Double Taxation Avoidance Agreements (DTAAs) between India and these countries say that the NRI's home country can tax the profits instead of India.
Recent court decisions have made this clearer.
To get this benefit, NRIs need to show proof that they live in these countries and follow some rules.
This means they can keep more of their money without paying double taxes.
However, NRIs in countries like the US, UK, and Canada cannot get this benefit because their DTAAs with India are different.
NRIs in countries with favorable DTAAs may avoid tax on capital gains from Indian mutual funds.
Recent ITAT rulings confirm that capital gains on mutual funds are non-taxable in India for NRIs in countries like UAE and Singapore.
DTAAs can override domestic tax rules, granting exclusive taxing rights to the country of residence.
NRIs need to provide documents like a Tax Residency Certificate (TRC) and Form 10F to claim DTAA benefits.
NRIs in countries like the US, UK, and Canada cannot claim this benefit due to different DTAA provisions.
- Who
- Non-Resident Indians (NRIs) in countries with favorable Double Taxation Avoidance Agreements (DTAAs)
- What
- Can avoid tax on capital gains from Indian mutual funds
- When
- Recent rulings by the Income Tax Appellate Tribunal (ITAT) have clarified this
- Where
- India and countries with favorable DTAAs
- Why
- Because DTAAs can override domestic tax rules and grant exclusive taxing rights to the country of residence
- Tax Rate for Long-Term Gains
- 12.5% (above ₹1.25 lakh)
- Tax Rate for Short-Term Gains
- 20%
- Key Document for DTAA Benefit
- Tax Residency Certificate (TRC)
- Form for Self-Declaration
- Form 10F
- ITR Form for Exempt Income
- Form ITR-2
- Countries with Favorable DTAA
- UAE, Singapore, Oman, Qatar, Saudi Arabia, Kuwait, Malaysia, France, Germany
- Countries Without DTAA Benefit
- US, UK, Canada
- Key Article in DTAA
- Article 13