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NRIs need to file income tax return to get TDS refund
June, 18th 2019

Income from shifting from one scheme to another scheme of mutual funds is considered transfer and is subject to long term capital gains or short term capital gains depending upon the holding period.

We live in Melbourne. We have some fixed deposits in India. Recently the bank informed us that they have matured and that some TDS was deducted. As we are NRIs, would it be possible to get the tax back? What is the procedure and what is the maximum amount we can deposit in FD? – Radhika

Yes, the tax can be refunded if the tax deducted is in excess of your actual tax liability in India. To get the tax refund, you will need to file income tax return for the year in which tax has been deducted. Also, if your taxable income in India is more than the minimum exemption limit (i.e., Rs 2.50 lakh for those aged less than 60, Rs 3 lakh for those aged less than 80 and Rs 5 lakh for those aged 80 or above), you are required to file ITR in India irrespective of the fact you have any tax refund due or any tax payable.

> While shifting Rs 42,000 from one scheme to another mutual fund it has shown an income of Rs 1,145 and deducted TDS @15% as STCG. Please guide me where to show which amount in ITR2. —Dilip Saksena

Income from shifting from one scheme to another scheme of mutual funds is considered transfer and is subject to long term capital gains or short term capital gains depending upon the holding period. This amount shall be reported as income under “Schedule CG” and “Schedule TDS”.

> As per the current income tax law, long term capital gains on sale of equity shares (including mutual fund redemptions) are taxable at 10% over Rs 1 lakh, provided security transaction tax (STT) is paid both on sale and purchase of equity shares. What is the long term capital gain position on:

a) Sale of shares purchased before (STT) was introduced in 2004.
b) Sale of rights and bonus shares on which no STT is paid at the time of acquiring the shares. —Naresh Bhatia

The condition to pay STT at the time of acquisition shall not apply on the securities (Shares/Units of Mutual Fund) which were purchased on or before October 1, 2004, i.e. before introduction of STT, hence the tax will be calculated under Section 112A at 10% for capital gain exceeding Rs 1 lakh. The condition to pay STT at the time of acquisition shall not apply on securities which were acquired through rights and bonus, hence the tax will be calculated under Section 112A at 10% exceeding Rs 1 lakh of such capital gains.

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