NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Taxation
A non-resident investor redeems units of an equity-oriented mutual fund. Which statement about TDS on capital gains is correct?
For a non-resident investor, the mutual fund deducts TDS on the capital gains at the applicable rates. The deduction is on the gain, not the entire redemption proceeds, unlike resident investors, who generally do not suffer TDS on capital gains.
- ANo TDS is ever deducted for non-residents
- BThe fund deducts TDS on the capital gains at applicable ratesCorrect
- CTDS is deducted only on dividend, never on capital gains
- DTDS is deducted on the entire redemption amount, not the gain
Explanation
For non-resident investors, the mutual fund deducts tax at source on capital gains at the rates prescribed, applied to the gain portion. Resident investors generally have no TDS on capital gains. Deducting on the full redemption amount is incorrect.
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