298. Tax on sale of stocks and

mutual funds in India

Q: Hi Sir, I have been working in UK for nearly 7 years and would be going back to India late next year. Me and my family have a British passport and currently awaiting the OCI. I have some basic queries and would wonder whether you can help me with this. - I own a property in India and receive rent every month, in which country I should pay tax for this amount ? - I have bought mutual funds and stocks when I use to stay in India, If I sell them do I have to pay tax on profit earn amount ? - Any impact on my LIC pension policies because of my new status ? Thanks for all your guidance. Rakesh A. I assume you question relates to a scenario of when you return to India next year. 1. Once you return to India and become a non resident of UK, you would be taxed in UK only on your income that is derived in UK or received in UK. While living in India, you would be paying tax in India for income earned in India and this would include your rental income in India. 2. Regards to your mutual funds and stocks, tax would depend on whether your investment was short or long term: In case you held the stocks for less than a year, the profit you make will be taxed in India @ 15% On the other hand, for long term holdings (more than one year)and the SST is paid, there is no tax. SST refers to securities transaction tax. Mutual funds (Equity) for short term holding (sold within one year) 15% tax applies. Mutual funds(Equity) sold after being held for more than one year, no tax applies. Mutual Funds (Non Equity) held less than one year, the profit is added to your income and taxed according to the tax bracket you fall into after taking the allowed exemptions. For long term non equity mutual funds, the tax would be 10% or 20% with indexation which ever is less. Any Dividend received from Mutual Funds is not taxable. 3. LIC pension policies normally should not be affected by the change of your status.