1. Short-Term Capital Gains Tax (STCG)

• Equity and Equity Mutual Funds: A 20% tax rate now applies to profits from the sale of equity shares or mutual funds if held for less than one year (previously 15%).
• Real Estate and Other Assets: A 30% tax rate applies to profits from the sale of real estate or other assets if held for less than two years.
  
  

2. Long-Term Capital Gains Tax (LTCG)

• Equity and Equity Mutual Funds: Long-term capital gains exceeding ₹1.25 lakh are taxed at 12.5% (previously 10%) without the benefit of indexation (if held for more than one year).
• Real Estate: Profits from the sale of real estate (held for more than two years) are subject to a 20% tax rate with indexation benefits, which has been revised to 12.5% for transactions after July 23, 2024.
  
  

1. Taxability Based on Residential Status

The taxation of capital gains depends on your residential status. If you're an NRI, Indian tax laws apply, and your capital gains will be taxed based on the type of asset and the holding period.

2. Double Taxation Avoidance Agreement (DTAA)

If you're a tax resident of a country that has a DTAA with India, you may be eligible for reduced tax rates on capital gains. This agreement prevents you from paying taxes on the same income in both countries.

3. Tax Deducted at Source (TDS) Adjustments

For NRIs, tax is generally deducted at source (TDS) on capital gains at the time of sale. The TDS rates have been adjusted as follows:

• Equity Shares & Mutual Funds: 20% on STCG (previously 15%).
• Real Estate: 12.5% on LTCG (for transactions post-July 23, 2024, previously 20%).

4.  Removal of Indexation Benefit

The Budget 2024 has eliminated the indexation benefit for future transactions. This change impacts the calculation of long-term capital gains, potentially increasing the taxable amount.

5.  Repatriation of Funds

NRIs can repatriate the sale proceeds from their capital gains to their country of residence, subject to certain restrictions. It is advisable to consult a financial advisor to ensure compliance with FEMA (Foreign Exchange Management Act) guidelines.

As an NRI, you need to file your income tax return (ITR) in India to report your capital gains. The filing process includes:

1. Filing ITR-2 or ITR-3: Depending on your source of income, NRIs must file either ITR-2 (for income from capital gains, property, etc.) or ITR-3 (if running a business or profession).
2. Provide Necessary Documents: You need to submit documents like the sale deed (for property), share purchase details (for stocks), and a copy of the PAN card.
3. Pay Taxes: After calculating your tax liabilities, you must pay the applicable taxes and file your return within the due dates.
   

Investing in India can still yield significant returns for NRIs, but the Budget 2024 reforms have introduced changes that NRIs need to understand in order to optimize their tax obligations. By staying informed and consulting with tax professionals, you can navigate these changes effectively and make the most of your investments.