TDS (Tax Deducted At Source)


As per regulatory guidelines, Tax (if applicable) has to be deducted at source for all the profits done in the equity market transactions by NRIs. Before crediting sales proceeds it is the responsibility of the remitter to determine the appropriate Tax and deduct it at source.

  • What are the Rates applicable under TDS?

    TDS rate is different as per the tenure of the investment. It can be classified into:


    Equities:


    Long-term capital gain - If the period of holding is more than 1 year i.e. the difference between the date of purchase and sell is more than 1 year, then the TDS rate applicable is 12.5% on gains exceeding Rs1.25 lakhs in a financial year.


    Short-term capital gain - If the period of holding is less than 1 year i.e. the difference between the date of purchase and sell is less than 1 year, then the TDS rate applicable is 20% on capital gain

  • How is TDS calculated?

    TDS is computed on the profit amount or the gain as per the applicable rate i.e. short term or long term. No TDS is charged on losses.

  • How is TDS deducted and the money transferred to the bank account?

    For any TDS to be deducted and money to be remitted to bank account, there are three things that have to be verified.


    • Amount of gain = Selling price - Purchase price
    • Duration of holding i.e. long term or short term = Selling date - Purchase date
    • Source of fund for purchase i.e. NRE or NRO

    Important: TDS is deducted only at the time of crediting sales proceeds. This can be explained better with the following example:

  • How can I identify how much TDS has been deducted for a particular sales proceeds ?

    TDS amount will be reflecting in you bank account statement & at the end of the year you will get the TDS certificates for all sales transaction taken place in last year.