NRI Talk: Why NRIs in Dubai and Singapore pay zero tax on mutual fund gains, Nitin Aggarwal explains
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In this edition of NRI Talk, Nitin Aggarwal, Director of Investment Research and Advisory at Client Associates, breaks down why NRIs residing in countries like Dubai and Singapore pay zero tax on their mutual fund gains in India.He also shares valuable insights on why India continues to be a top investment destination for NRIs, common pitfalls to avoid, and the sectors they're most bullish on.From tax advantages under DTAA to the long-term wealth mindset of global investors, this conversation offers a deep dive into how NRIs are approaching India's growth story. Edited Excerpts -A) India is one of the most preferred markets for the long-term investments for NRIs. Several clients have increased exposure to India in recent years as there is no country other than India with strong and stable economic growth prospects.A) The debate stems from a recent ruling by Income Tax Appellate Tribunal (ITAT) where it ruled that under the Double Taxation Avoidance Agreement (DTAA), NRIs are not required to pay long-term taxed on mutual funds gains and these should be taxed in the residing countries. And since some of the countries, such as UAE, that India has DTAA do not charge capital gains, the NRIs in those countries will effectively pay Zero tax on gains from mutual fund investments in India.A) We always advise to understand the risk associated with the investments. We advise using a balanced approach instead of just chasing returns.A) Most of the NRIs that we engage with have a long-term investment horizon. They are looking to build wealth through compounding over the long-term.A) Most of the NRIs are looking to diversify their exposure by building positions in high growth, stable economies.A) Currently we are favouring financial services and consumption driven sectors, and that is what we are advising out clients to allocate money too.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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