Tax Effect
| Tax Implications for Investors | ||||||||||
| Type of Investors | Capital Gains | Interest | Dividend | Dividend Distribution Tax | ||||||
| Listed Equity Shares Equity Schemes |
Unlisted Equity Shares Other Schemes |
Investors' Perspective | Investors' Perspective | Paid by Company / Mutual Fund | ||||||
| Short Term | Long Term | TDS | Short Term | Long Term | TDS | Bonds / Fixed Deposits | Equity Shares / All Schemes | Equity Schemes / Shares | Other Schemes | |
| Resident Individual | 15% | 10% | Nil | As per Slab | 20% with Indexation | Nil | As per Slab | Nil | 10% | 25% |
| HUF | 15% | 10% | Nil | As per Slab | 20% with Indexation | Nil | As per Slab | Nil | 10% | 25% |
| Partnership Firm | 15% | 10% | Nil | 30% | 20% with Indexation | Nil | 30% | Nil | 10% | 30% |
| AOP / BOI | 15% | 10% | Nil | As per Slab | 20% with Indexation | Nil | As per Slab | Nil | 10% | 30% |
| Domestic Companies | 15% | 10% | Nil | 30% | 20% with Indexation | Nil | 30% | Nil | 10% | 30% |
| Non-Resident Indians | 15% | 10% | STCG: 15% LTCG: 10% |
As per Slab | Unlisted: 10% Listed: 20% with indexation |
STCG: 30% LTCG: Unlisted: 10% Listed: 20% with indexation |
NRO: As per Slab NRE: Exempt |
Nil | 10% | 25% |
| Foreign Portfolio Investors | 15% | 10% | Nil | 30% | 10% | Nil | INR Bonds: 5% Others: 20% |
Nil | 10% | 30% |
| Foreign Companies | 15% | 10% | STCG: 15% LTCG: 10% |
40% | Unlisted: 10% Listed: 20% with indexation |
STCG: 40% LTCG: Unlisted: 10% Listed: 20% with indexation |
40% | Nil | 10% | 30% |
Note:
1. Above tax rates are to be increased by
- Education cess: 4%
- Surcharge as follows:
- Resident Individual & HUF: 10% in case income is between Rs 50 lakhs to Rs 1 Crore
- Resident Individual & HUF: 15% in case income is over Rs 1 Crore
- Partnership Firm: 12% in case income is over Rs 1 Crore
- Domestic Companies: 7% in case income is between Rs 1 Crore to 10 Crore
- Domestic Companies: 12% in case income is over 10 Crore
- Foreign Companies & FPI: 2% in case income is between Rs 1 Crore to 10 Crore
- Foreign Companies & FPI: 5% in case income is over 10 Crore
- Dividend Distribution Tax: 12% on gross basis
Notes on Long Term Capital Gains
2. LTCG exceeding Rs. 1,00,000 on sale of Equity Mutual Funds / Shares will be taxed at 10% (plus applicable surcharge and education cess)
3. Cost of acquisition in respect of units acquired before 1 February 2018 should be computed at higher of the following:
- a. Actual cost of acquisition; and
- Lower of -
- FMV as on 31 January 2018 or
- Consideration received on transfer of shares / units
4. The FMV of the shares / units shall be the following:
- a. Quoted shares / units: Highest price quoted on the recognised stock exchange on 31 January 2018
- Unquoted shares / units: Net Asset Value as on 31 January 2018
Notes on Dividend
5. In case of resident individual/HUF/Firm, if the aggregate dividend received from a domestic company exceeds Rs 10,00,000, the dividend shall be taxed at 10% of excess amount.
6. Dividend received from a foreign company is taxable at slab rates. Benefit under DTAA would be available.
NRI and FPI
Non-resident investors / FPIs would be eligible to be taxed at rate lower of: that prescribed under the Income-tax Act or Double Tax Avoidance Agreement with respective country. In order to claim DTAA benefits, a non-resident will have to obtain a Tax Residency Certificate from their home country along-with details filled in Form 10F.
Double Tax Avoidance Agreement (DTAA)
Link to access DTAA of various countries:
https://www.incometaxindia.gov.in/Pages/international-taxation/dtaa.aspx