Taxation of Non-Resident Investors in India – TDS, DTAA & Capital Gains Explained
India continues to be a preferred investment destination for global investors. However, understanding the Indian taxation system is critical for non-resident investors to maximize returns and remain compliant. Whether investing in equity, real estate, startups, or Indian subsidiaries, tax planning should never be an afterthought.
At Jain Prachi & Company, we help non-resident individuals and entities structure their investments and handle their tax obligations efficiently under Indian law.
Who is Considered a Non-Resident Under Indian Tax Law?
According to the Income Tax Act, 1961, an individual is a non-resident if they do not satisfy the prescribed number of days of physical stay in India.
For entities, residency is determined based on:
- Place of effective management, and
- Incorporation outside India
Key Tax Components for Non-Resident Investors
- Tax Deducted at Source (TDS)
TDS is the tax withheld at the source of income. In most cross-border transactions, the Indian party is responsible for deducting TDS before remitting the income abroad.
Common TDS rates for non-residents:
Type of Income | TDS Rate (excluding surcharge & cess) |
Interest | 20% (can be lower with DTAA) |
Royalties/Technical Fees | 10% |
Capital Gains (short-term) | 15% or 30% |
Capital Gains (long-term) | 10% or 20% |
Dividend Income | 20% |
Note: Rates may vary depending on the relevant DTAA.
- Double Taxation Avoidance Agreement (DTAA)
India has DTAA treaties with over 90 countries including the US, UK, Germany, Singapore, and the UAE. These agreements prevent the same income from being taxed in both countries and can significantly reduce the effective tax burden.
Key DTAA Benefits:
- Lower TDS rates
- Credit for taxes paid in India in your home country
- Exemption for specific incomes like interest or dividends under certain thresholds
To claim DTAA benefits, non-residents must submit:
- Tax Residency Certificate (TRC) from their home country
- Form 10F
- Self-declaration regarding beneficial ownership
- Capital Gains Tax
Depending on the asset class and holding period, capital gains may be classified as short-term or long-term:
- Shares (Listed): LTCG taxed at 10% (if gains exceed ₹1 lakh); STCG taxed at 15%
- Unlisted Shares: LTCG taxed at 10% (with indexation); STCG taxed at 30%
- Real Estate: LTCG taxed at 20% with indexation benefits
Filing a return in India is often necessary to claim refunds or carry forward capital losses.
Important Compliance Requirements
- PAN: Mandatory for TDS deduction and tax return filing
- Income Tax Return: Required if total income in India exceeds the basic exemption limit or to claim refunds
- Form 15CA/15CB: For foreign remittance processing via banks
- Form 67: To claim foreign tax credit under DTAA
Strategic Tax Planning with Jain Prachi & Company
We work closely with non-resident investors and business entities to:
- Determine residential status and applicable tax rates
- Apply DTAA provisions for reduced TDS
- File Form 15CB (CA certificate) for foreign remittances
- Optimize capital gain taxes using exemptions and indexation
- Assist in PAN and ITR filing with accurate documentation
- Manage refunds and foreign tax credits
Why Choose Jain Prachi & Company for NRI Taxation in India?
- Decades of experience in non-resident tax compliance and planning
- Hands-on support with RBI, bank, and Income Tax reporting
- Risk-free, timely filings with full documentation
- Transparent fee structure and dedicated consultation
Get Clarity on Your Indian Tax Exposure
Whether you’re investing, exiting, or repatriating funds from India, tax compliance should be handled by specialists who understand your needs.
📧 Email: contactus@jainprachi.com
🌐 Website: https://jainprachi.com
FAQs – Non-Resident Taxation in India
Q: Can I claim a refund if excess TDS was deducted?
Yes. File an Income Tax Return in India to claim the refund.
Q: What documents do I need to claim DTAA benefits?
TRC, Form 10F, and self-declaration of beneficial ownership.
Q: Is tax filing mandatory even if I have zero income?
It’s not mandatory, but filing can help claim refunds or carry forward capital losses.
