The short answer. A non-resident is taxed in India on income that arises in India. For listed equity as at 29 September 2026, gains held more than twelve months are taxed at 12.5% above an annual exemption of ₹1.25 lakh; held twelve months or less, at 20%. Tax is usually deducted at source before the money reaches you, and your country of residence may tax the same income again — which is what a double taxation treaty exists to address.
The rates, as at 29 September 2026
| Listed equity | Holding period | Rate |
|---|---|---|
| Long-term capital gains | more than 12 months | 12.5% on gains above ₹1.25 lakh a year |
| Short-term capital gains | 12 months or less | 20% |
These came in under the Finance Act 2024 and were left unchanged for FY 2026–27. Indexation has been removed for most assets. Surcharge and cess apply on top, and depend on your total income. Rates change with every Finance Act — check the current position before you rely on it.
Tax deducted at source, and why your money arrives short
For a resident, capital gains are usually settled when the return is filed. For a non-resident, tax is commonly deducted at source — the payer withholds it and remits it before you see the proceeds.
Two consequences follow. Your cash arrives net of tax rather than gross, so the timing of your own planning changes. And if too much was withheld, recovering it means filing an Indian return, which is a reason to file one even in a year you think you have nothing to declare.
Being taxed twice, and the treaty that prevents it
India taxes income arising in India. Your country of residence generally taxes your worldwide income. The same gain can therefore fall into two nets.
India has double taxation avoidance agreements with most countries where the diaspora is concentrated. The mechanism varies — sometimes a credit for tax already paid, sometimes an exemption, sometimes a reduced rate — and it varies by treaty and by kind of income.
This is the point at which general information stops being useful. Whether a particular treaty helps you, and what you must do to claim it, depends on your residence, the treaty, and often a tax residency certificate. It needs advice in both countries, not an article.
What actually goes wrong
Assuming the country of residence does not need to know. Most tax systems require worldwide income to be declared, whether or not tax was already paid in India.
Not filing in India because tax was already deducted. Deduction is not assessment. Excess withholding is only recovered by filing.
Forgetting that the holding period is the manager's, not yours. In a portfolio where someone else decides when to sell, the twelve-month line is crossed by their decisions. That is worth understanding before choosing a vehicle — we have written about what that means in a managed portfolio.
Related: which account your money should sit in, and what it takes to move it out.
Before you act on any of this
This is general information about how the rules work, not investment, tax or legal advice, and not a recommendation to buy or sell anything. Your position depends on your residential status, your country of residence and your own circumstances, and the rules change. Take advice from a qualified professional in both countries before you act. Nothing here is an offer, and Redberyl Investment Managers LLP gives no assurance of any return.
Sources
- Income Tax Department — Capital Gains — checked 29 September 2026
- Reserve Bank of India — FEMA and NRI accounts — checked 29 September 2026
More in this series: NRE and NRO accounts · how the tax works · taking money out · PMS and non-residents