In Budget 2025, the Association of Mutual Funds in India (AMFI) is asking for a change that will help Non-Resident Indians (NRIs) with their taxes. They want to set a single tax rate of 10% on money taken from mutual funds, like dividends and capital gains. This will make it easier for NRIs and mutual funds to handle taxes.
Currently, when NRIs earn money from mutual funds, they pay a tax called TDS (Tax Deducted at Source). The tax rates for NRIs can be confusing because they depend on how much money a person makes in a year, which can range from 10% to 37%. Plus, there’s an additional 4% charge called Health and Education Cess.
But there’s a problem: mutual funds don’t always know how much money an NRI has made when they are required to take out the taxes. This makes it tough for them to decide the right rate to apply. Because of this uncertainty, some mutual funds charge the highest rate of 37%, while others try to guess. This inconsistency hurts NRIs and creates confusion.
AMFI believes that by having a clear 10% rate for everyone, it will make things simpler for mutual funds and help NRI investors. This way, there will be no surprise costs and everyone will know what to expect.
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