Budget 2024 proposes a higher tax on certain capital gains for non-residents. However, it has also proposed to reduce on certain assets. The new tax rate will apply only on transfers made on or after July 23, 2024. The revision is aimed at bringing parity between resident and non resident taxation structure.
NRI tax hiked on these assets
- In Budget 2024, long-term capital gains resulting on transfer referred to in section 115E has been raised to 12.5% for certain assets.
- Long-term capital gains referred to in section 112A exceeding Rs 1, 25,000 will now be taxable at 12.5% instead of 10% from 23 July 2024.
- Short-term capital gains referred to in section 111A is hiked to 20% from 15%.
New rates of NRI TDS applicable from July 23
| Sr. no. | Income | For transfers taking place before 23rd day of July, 2024/ Rate of TDS | For transfers taking place on or after 23rd day of July, 2024 / Rate of TDS |
| 1 | Long-term capital gains referred to in section 115E | 10% | 12.5% |
| 2 | Long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-section (1) of section 112 | 10% | The clause is not applicable for transfers on or after 23rd July, 2024 |
| 3 | Long-term capital gains referred to in section 112A exceeding one lakh twenty five thousand rupees | 10% | 12.5% |
| 4 | Long-term capital gains (not being long term capital gains referred to in clauses (33) and (36) of section 10 | 20% | 12.5% |
| 5 | Short-term capital referred to in section 111A | 15% | 20% |
NRI tax rate reduced on these assets
While long-term capital gains [not being long term capital gains referred to in clauses (33) and (36) of section 10] is reduced from 20% to 12.5%.
Long-term capital gains referred to in sub-clause (iii) of clause (c) of sub section (1) of section 112 of 10% will not be applicable for transfers on or after July 23, 2024.
According to the Budget 2024 announcement, “Parity in taxation between resident and non-resident assesses: To bring parity of taxation between residents and non-residents, corresponding amendments to section 115AD, 115AB, 115AC, 115ACA and 115E are being made to align the rates of taxation in respect of long-term capital gains proposed under section 112A and 112 and rates of short term capital gains proposed under section 111A.”
Rationalisation of Tax Deducted at Source rates
As per the budget 2024, “There are various provisions of Tax Deduction at Source (TDS) with different thresholds and multiple rates between 0.1%, 1%, 2%, 5%, 10%, 20%, 30% and above. To improve ease of doing business and better compliance by taxpayers, the TDS rates are proposed to be reduced. However, no change would occur with respect to sections such as TDS on salary, TDS on virtual digital assets, TDS on winnings from lottery etc/ race horses, payment on transfer of immovable property and payments to non-residents, TDS rates for TDS on contracts etc.”
Source: The Economic Times
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