NRIs in UAE, Singapore & Mauritius Pay Zero Tax on Mutual Fund Gains

Let’s break this down in simple terms:

No complex finance talk. No jargon. Just a straightforward look at how and why this works for some NRIs and not for others.

How is This Possible?

For most Indian investors, selling mutual funds for a profit means paying capital gains tax. But if you’re an NRI in the UAE, Singapore, or Mauritius—you can legally avoid this tax, thanks to something called the Double Taxation Avoidance Agreement (DTAA).

What is DTAA?

DTAA is a treaty between India and another country that prevents you from being taxed twice on the same income in both countries.

Some countries (like UAE) don’t tax capital gains at all. So under DTAA, India won’t tax it either. That’s why NRIs in these specific countries enjoy tax-free mutual fund redemptions. 

Why only UAE, Singapore, and Mauritius?

India has DTAAs with over 90 countries, but the benefits vary.

• UAE: No personal income tax or capital gains tax.
• Singapore: Follows territorial taxation—capital gains often not taxed.
• Mauritius: Favourable treaty terms + no capital gains tax locally.

These countries do not tax gains from Indian mutual funds. So under DTAA, India doesn’t either.

Why Not Other Countries Like the US or UK?

Good question.

Let’s take USA as an example:

• The US taxes global income (including capital gains).
• So, the DTAA between India and the US doesn’t exempt capital gains—India will still tax them.

The same applies to the UK, Canada, Australia, and other high-tax countries.
In short: If the resident country taxes gains, DTAA won’t save you.

Documents Required for Tax Saving?

      To claim tax benefits under DTAA, you must submit:

1.Tax Residency Certificate (TRC)
      Issued by the government of your resident country

      Proves you’re a resident there for tax purposes

2.Form 10F

      A simple declaration form (can be submitted online)

3.Self-Declaration Letter

      Confirms you’re claiming treaty benefits honestly

4.PAN Card

       Required for investing in Indian mutual funds

5.KYC-compliant Indian bank account (preferably NRE/NRO)

The Process, Simplified

1. Invest in Indian mutual funds (as an NRI)
2. Submit DTAA documents before or while redeeming units
3. No TDS (Tax Deducted at Source) on capital gains if all documents are accepted
4. Enjoy 100% tax-free returns on your MFs legally
   
   

Key Points to Remember

• This applies mostly to debt mutual funds. Equity taxation is trickier but can also be optimized.
  
  
• Rules may change. Treaties can be revised.
  
  
• Not all mutual fund platforms handle DTAA documents properly. Choose wisely.
  
  

Want to Save More on Taxes? Let Experts Handle It.

Navigating tax laws, DTAA filings, and paperwork can be confusing. That’s where Pricebridge comes in.

We can help you: