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24 Aug 2026, 08:01 PM IST
Article / GuideIPO

Taxation on NRI Investment in India| Stocks, Mutual Funds, F&O Trades

Last updated August 22, 2026

This IPO News guide/article covers “Taxation on NRI Investment in India| Stocks, Mutual Funds, F&O Trades”. The page is organized around taxation on nri investment, capital gain on nri investment in india, nri capital gain taxation on equity investment, nri tds calculation on equity investment, nri taxation on mutual fund investment. IPO News presents the structured facts and tables in its own layout and wording.

Topics Covered

  • Taxation on NRI Investment
  • Capital Gain on NRI Investment in India
  • NRI Capital Gain Taxation on Equity Investment
  • NRI TDS Calculation on Equity Investment
  • NRI Taxation on Mutual Fund Investment
  • TDS on NRI investment in IDCW Mutual Fund Plans
  • NRI Tax implications on Derivative trading
  • Taxation on NRI Dividend Income
  • Tax treatment of NRE or NRO Interest Income
  • Tax Benefits to NRIs in India
  • Final thoughts
  • Zerodha Trade@20
  • Compare Stock Brokers Side-by-Side

Key Facts

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  • Short-term capital gain tax: NRIs have to pay 20% tax on all the short-term capital gains received from the sell of equity investment.
  • Long-term capital gain tax: All long-term profits on sale of listed shares over 12 months, are taxed at the rate of 12.5%.
  • Note: 12.5% LTCG tax is only applicable if the long-term capital gain is above the threshold limit of Rs 1,25,000. Likewise residents, NRIs also enjoy tax exemption on gains upto Rs 1.25 lakh.
  • If an NRI has purchased 500 shares of a company at Rs 1200 per share and sells all of the invested shares for Rs 1500 within 12 months.
  • Here period of holding is less than 1 year, so all the profits will be short-term capital gain. Here, is the TDS calculation;
  • = (1500*500) – (1200*500)
  • STCG tax on equity investment is 20%, so here, the TDS deduction will be at 20% of Rs 150,000 = Rs 30,000.
  • Now, assuming that if NRI sells its shares after 1 year at Rs 2,000 price so the TDS on the long-term capital gain will be;
  • = (2,000*500) – (1200*500)
  • In the above scenario, suppose, if NRI has a non-PIS account and documents are not submitted by him, then LTCG will be 15% of the total selling price worth Rs 10,00,000 which equals to Rs 150,000.
  • Let’s assume that an NRI has invested Rs 200,000 in a debt scheme in 2016, and decides to redeem his investment at Rs 2,95,000 in 2022 at a net profit of Rs 95,000.
  • CII for the purchase year is 280 while in 2022, the CII value is 331. Thus, indexed cost of acquisition will be;
  • = Rs (2,95,000 – 2,36,429)
  • This is subject to 20% LTCG TDS deduction which comes to Rs 11,714.
  • Alternatively, an NRI can also opt for no indexation benefit and pay TDS at 10% of total gains worth Rs 95,000. In that case, NRI’s tax liability will be Rs 9,500.
  • Profits received from selling IDCW mutual fund schemes are subject to a 20% TDS deduction and the remaining amount will be credited to the NRI bank account.
  • An NRI shareholder who receives dividend income on capital invested in Indian companies is taxed at 20% plus applicable surcharge and 4% health and education cess.
  • NRIs can avail of tax benefit of a maximum of Rs 150,000 on investment in equity-linked tax-saving mutual fund schemes (ELSS).
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Data Tables

Listed shares (Equity investment) or Equity-oriented mutual funds Debt mutual funds
Short-term capital gain If an NRI held investment in shares or units of equity mutual fund schemes for a period upto 1 year or 12 months, the profit on sale of such securities will be considered as short-term capital gain (STCG). For debt-oriented mutual funds schemes, if an NRI receives profits by selling securities within 36 months or 3 years, the gains accrued is termed as short-term capital gain (STCG).
Long-term capital gain If an NRI investor dispose investment in shares and equity mutual funds after an investment horizon of 1 year, profits or gain received is called long-term capital gain. Profit on sale of debt-oriented mutual fund schemes after 3 years from the day of acquisition, is called long-term capital gain.
Types of mutual funds STCG tax rate LTCG tax rate
Equity-oriented mutual funds (Large cap, mid cap, multi cap, small cap, Hybrid mutual funds, etc.) Capital gain from sell of units of domestic equity mutual fund schemes within 1 year, is taxed at 15%. NRIs are taxed at 10% long-term capital gain tax on sell of equity oriented schemes.
Debt-oriented mutual funds (Short duration fund, Medium duration fund, long duration fund, etc.) Short-term capital gain derived on sell of debt-oriented mutual funds within 3 years, is taxed at the rate of 30%. NRIs have to pay 20% tax with indexation on long-term capital gain from debt-oriented mutual fund schemes. NRIs also have the option to pay LTCG tax on debt funds at 10% without indexation benefits.

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