TDS on MF redemption for NRIs (Section 195)

Tue, 12 May 2026 00:00:00 +0000

Tax Deducted at Source (TDS) on mutual fund redemptions for Non-Resident Indians (NRIs) is governed by Section 195 of the Income Tax Act 1961. Unlike resident investors who are not subject to TDS on capital gains from mutual fund redemptions, NRI investors are subject to TDS withheld by the fund house (AMC) at the time of redemption, before the net proceeds are credited to the investor’s NRE or NRO account. The TDS rate depends on the type of capital gain (short-term or long-term) and the fund classification (equity-oriented or non-equity), and is applied on gross redemption proceeds without deducting the Rs 1,25,000 annual LTCG exemption. Excess TDS can be reclaimed by the NRI by filing an income-tax return in India.

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TDS on MF redemption for NRIs (Section 195)