I am a non-resident Indian (NRI). I do (Systematic Investment Plan)SIPs in six equity mutual fund schemes that amount to INR1.8 lakh a month. I do not have any income in India and every year I get refund for tax deducted at source (TDS) of debt funds. I would like to churn my portfolio (units that have completed 1 year) every year before 31 March and reinvest the amount in same plan before 31 March. Will long-term capital gain tax (LTCG) tax reflect on my 26AS certificate? Can I claim refund as I do not have any income in India?

Since you are an NRI and investments had made as the capacity of NRI, TDS will be deducted on each payout to your account. LTCG is exempt upto Rs.1 lakh. You will get refund of TDS, if excess tax had been collected from you. And in your case, the possibility of getting refund is very high, since TDS would be more than 30% and tax rate on LTCG is 10%. All the TDS will be reflected in your form 26AS.

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Swara Swara
Answered on February 10,2020

An individual must file an income tax return in India when her total income exceeds the minimum exemption limit of INR2.5 lakh. This income may have been earned from any source, including income from sale of mutual funds. Till 31 March 2018, income from sale of equity mutual funds held for more than a year is exempt from tax. LTCG tax will have to be paid on sale of equity mutual funds made on or after 1 April 2018, where these were held for more than 1 year. Also note that TDS is not applicable on sale of equity mutual funds, therefore tax on this transaction will not be reflected in your Form 26AS.