Taxability of Short-Term Capital Gains (STCG) on transfer of Equity Shares/Units of Equity Oriented Mutual Funds for Non-Resident Individuals
If a Non-Resident Individual transfers Equity Shares or Units of Equity Oriented Mutual Funds through a recognized stock exchange within one year of their purchase, and this transaction yields profits/gains, then such profits/gains shall be classified as Short-Term Capital Gains (STCG) which is subject to income tax @ 15% as per Section 111A of the Income Tax Act.
Other related provisions w.r.t. Non-Resident Individuals
Allow us to elucidate this matter by providing an illustration of Mr. A who is a non-resident in India. During the previous year, Mr. A has earned short term capital gains on transfer of equity shares, in addition to interest and dividend income. Furthermore, he expended a sum of Rs 150,000 towards life insurance premiums and Rs 25,000 towards health insurance premiums. We will compute his taxable income at different income levels.
Computation of Taxable Income of Mr. A (Non-Resident)
(All figures in INR)
|Particulars||Case I||Case II||Case III|
|STCG on transfer of Equity shares on recognized stock exchange||200,000||200,000||200,000|
|Interest / Dividend Income from India||Nil||100,000||450,000|
|Gross Total Income||200,000||300,000||650,000|
|Chapter VI-A Deduction U/s 80C, 80D, 80TTA etc.||Nil||100,000
(Chapter VI-A deductions are allowable only from interest / dividend income)
|Basic Exemption Limit||Not Available||Available from Interest / Dividend Income only||Available from Interest / Dividend Income|
|Income Taxable at Flat Rate @ 15%||200,000||200,000||200,000|
|Income Taxable at Applicable Slab Rate||Nil||Nil||275,000|
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