How much tax do NRIs pay on Indian shares?

On listed shares sold within 12 months, short-term capital gains are taxed at 20%. On shares held longer than 12 months, long-term gains are taxed at 12.5% on the amount above a ₹1.25 lakh annual exemption. Both rates apply from 23 July 2024 and attract surcharge and cess.

Is TDS deducted on an NRI's stock gains?

Yes. Unlike resident Indians, NRIs have tax deducted at source — the broker or bank withholds TDS on each capital gain at the time of sale, and 20% (plus cess) on dividends.

How can an NRI reduce TDS using a tax treaty?

If your country of residence has a Double Taxation Avoidance Agreement (DTAA) with India, you can claim a lower rate by giving your bank a valid Tax Residency Certificate (TRC) and Form 10F before the income is paid.

Can an NRI get a refund of excess TDS?

Yes. If the TDS deducted is more than your actual liability — for example because the ₹1.25 lakh LTCG exemption or a DTAA rate was not applied — you can claim the excess back by filing an income-tax return in India.

For NRIs

How NRIs are taxed on Indian stocks

Capital gains, dividends, TDS at source and treaty relief — what an NRI actually pays on Indian shares, updated for the rates that took effect in July 2024.

Written & maintained by Ankit Sharma, Founder, HiddenHire. This is general information, not tax advice — see the note at the end.

Tax is where NRI stock investing differs most from resident investing — not so much in the rates as in how and when the tax is collected. Here is the full picture for listed Indian shares. This page is part of our guide to investing in Indian stocks as an NRI.

Capital gains on listed shares

The holding period decides which rate applies:

Short-term (held ≤ 12 months) — 20%. Gains on listed shares sold within a year are short-term capital gains, taxed at a flat 20% (this rose from 15% on 23 July 2024).
Long-term (held > 12 months) — 12.5%. Gains on shares held more than a year are long-term capital gains, taxed at 12.5% on the amount above a ₹1.25 lakh exemption each financial year (this replaced the earlier 10%-above-₹1-lakh rule on 23 July 2024).

Both rates are subject to applicable surcharge and 4% health & education cess, so the effective rate is a little higher.

The big NRI difference: TDS at source

Resident Indians usually settle capital-gains tax themselves when they file. NRIs do not — tax is deducted at source. Your broker or bank withholds the TDS on each gain at the time of sale, before the proceeds reach your account. That means you may have tax taken even on a small gain, and the only way to reclaim any excess is by filing a return (see below).

Tax on dividends

Dividends from Indian companies are taxable in India. For NRIs, the company or registrar deducts TDS at 20% plus cess (around 20.8%) under Section 195 before paying the dividend. A DTAA can reduce this — many treaties cap dividend tax at 10–15%.

Using your tax treaty (DTAA) to pay less

India has Double Taxation Avoidance Agreements with most countries where NRIs live. A DTAA lets you avoid being taxed twice on the same income and often gives a lower rate than the default. To claim it, give your bank or broker, before the income is paid:

a valid Tax Residency Certificate (TRC) from your country of residence, and
a completed Form 10F.

Without these, the payer will usually deduct at the full domestic rate, and you'll have to claim the difference back later.

Filing a return and claiming refunds

Because TDS is deducted up front, it is common for NRIs to have more tax withheld than they actually owe — for instance when the ₹1.25 lakh LTCG exemption or a lower treaty rate was not applied at source. Filing an income-tax return in India lets you reconcile this and claim a refund of the excess.

Important

StocksWizard is an informational and educational tool, not a tax adviser, and this page is general information, not personalised tax advice. Tax rates, surcharges and treaty rates change, and your position depends on your country of residence, your total Indian income and your residential status for the year. Confirm the current rules with a qualified chartered accountant or tax adviser, and read our full disclaimer.