Sale of listed mutual fund by an NRI wont be liable to Income tax

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Section 47 states various transaction or transfer which wont be liable for Capital gain tax. In this regard CBDT vide notification Dt. 05.03.2020 has mentioned some securities which won’t be liable for capital gain tax if sold by NRI which is as under:

• foreign currency denominated bond
• unit of a Mutual Fund
• unit of a business trust
• foreign currency denominated equity share of a company
• unit of Alternative Investment Fund

which are listed on a recognised stock exchange located in any International Financial Services Centre in accordance with the regulations made by the Securities and Exchange Board of India under the Securities and Exchange Board of India Act 1992 (15 of 1992) or the International Financial Services Centres Authority under the International Financial Services Centres Authority Act 2019 (50 of 2019), as the case may be.

Thus the above classification is with regard to section 47(viiab)(d) wherein it talks about various securities transferred by NRI won’t be considered u/s 45 i.e. Capital gain.

Hence as per above provision if an NRI transfer’s a foreign currency denominated bond, unit of a Mutual Fund, unit of a business trust, foreign currency denominated equity share of a company, unit of Alternative Investment Fund if wont be liable for capital gain tax if same was listed in recognised stock exchange located in any International Financial Services Centre.

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