My son resides in an African country. You are a Non-Resident Indian (NRI) who has a Non-Resident External Account (NRE) in India. Invest in fixed deposits, stocks and earn dividends on stocks. I would like to know if earning dividends is taxable in India. As far as I know, interest income from NRIs is not taxable, but I have no idea if dividends on stocks and capital gains are taxable and if an NRI is eligible for the exemption limit of ₹2.5 lakh as Indian residents.
Dividend income from the shares of an Indian company is taxable in India as of Tax Year 22. For an NRI, dividend income will be taxed at 20% (additional rate and surcharge as applicable). This tax will be deducted as TDS before the dividend is paid to your bank account. You can check the TDS deducted from your Form 26AS. For an Indian resident taxpayer, dividend income is taxed at the rates applicable to your total income. NRIs are eligible to claim the basic exemption limit of ₹2.5 lakh. Remember to summarize income from all sources before applying the basic exemption limit.
In case such dividend income is subject to tax in the country of your residence, you can refer to the double tax avoidance agreement between the country of residence and India so that you do not have to pay taxes on the same income twice.
The Central Board of Direct Taxes has announced that all PAN cards that are not linked to Aadhaar before June 30 will be declared “inoperative”. Does this apply to NRI PAN cards?
Please note that the deadline to link PAN with Aadhaar has now been extended to September 30. If you are an NRI and have an Aadhaar card, it is mandatory that you link it with your PAN card.
Archit Gupta is founder and CEO of ClearTax.
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