Tax Effect

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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

  1. Education cess: 4%
  2. Surcharge as follows:
    1. Resident Individual & HUF: 10% in case income is between Rs 50 lakhs to Rs 1 Crore
    2. Resident Individual & HUF: 15% in case income is over Rs 1 Crore
    3. Partnership Firm: 12% in case income is over Rs 1 Crore
    4. Domestic Companies: 7% in case income is between Rs 1 Crore to 10 Crore
    5. Domestic Companies: 12% in case income is over 10 Crore
    6. Foreign Companies & FPI: 2% in case income is between Rs 1 Crore to 10 Crore
    7. Foreign Companies & FPI: 5% in case income is over 10 Crore
    8. 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:

  1. a. Actual cost of acquisition; and
  2. Lower of -
    1. FMV as on 31 January 2018 or
    2. Consideration received on transfer of shares / units

4. The FMV of the shares / units shall be the following:

  1. a. Quoted shares / units: Highest price quoted on the recognised stock exchange on 31 January 2018
  2. 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