POSTED BY April 4, 2012 1:47 am COMMENTS (5)
ONHello,
I am an NRI and want to park money in liquid funds. i am going to use this money throught the next year.
Should i go with growth option or divident option. I am asking this related the tax implications.
Also will there be any TDS ?
Thanks
Jig
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Friends, please refer my post about investment for NRIs.
http://localhost/jagoforum2/nris-how-to-trade-in-shares-and-mfs-from-an-nre-account/3851/
It is in a similar context.
I need to understand what is the bst combination of PINS and NRE/NRO accounts I need.
Could you see and reply to that?
Regards,
Jugger
Thank you guys for reply.
I am based on Middle East. and i am investing through Demat A/c.
Regards
Hi Jig,
I might disagree with Ashal. I specialise in NRI taxation and investment options and my analysis is :
1. Liquid funds with Dividend option attracts around 27% Dividend Tax already deducted at source;
2. If NRI’s are based out of non-Middle East, they have to then pay tax on these Dividends in their respective countries. Dividend Income it tax free in India, but not in UK / US.
3. Better invest in Growth Option. This would at the time of selling attract around 30% TDS – which is not a problem. After this, file a return of Income to recover the TDS.
You might think that if Tax is deducted both at dividend and at Growth, then why should you bother. The reason being, Tax deducted on Dividend can neither be refunded via return filing nor can be claimed under the DTAA in your respective country. Alternatively, Tax deducted in case of growth option can be claimed as a refund in India.
Please ask any further question if this is not clear.
Regards
BFA
Banyan Financial Advisors
Dear Banyan, from prev. interaction with dear Jig, I was aware of his gulf based job profile. Regarding the dividend issue for liquid funds, an alternative may be found in short term debt funds. He do has some indian income also so in that sense, the growth option in Debt funds may not be fully tax free.
Thanks
Ashal
Dear Jig, as you are an NRI, it’s advisable to invest into Dividend option.
Thanks
Ashal