Lesson 44 of 50 for advisers · NRI clients: TDS and repatriation · 4 min read · Reviewed 13 Nov 2026
A fund deducts tax on income in respect of units paid to a non-resident at 20%, or a lower treaty rate if the NRI gives a tax residency certificate. Redemption proceeds from investments made through an NRE account or inward remittance can go back to NRE; NRO money can be repatriated up to US$1 million a financial year.
Income on units paid to a non-resident has tax deducted at 20% under section 393 (196A of the 1961 Act). A lower treaty rate applies if the NRI gives a tax residency certificate.
Tax on redemption gains is deducted at rates in force for the type of gain. Exact rates with surcharge and cess are worth checking with a CA.
Proceeds can go back to an NRE account only if the investment came from NRE or an inward remittance. NRE money is fully repatriable.
NRO money is repatriable up to US$1 million a financial year, and can move to NRE within that limit.
Key idea: Whether a fund house accepts residents of the US or Canada is its own decision; check the scheme document.
Try the short quiz on this page to check what stuck.
Section 159 of the Income-tax Act 2025, which carries over section 90 of the 1961 Act.
Yes. The proceeds then go to NRO, repatriable within the US$1 million yearly limit.
No. For residents, capital gains carry no TDS.
For learning only, not investment advice. Built in India by a team that tracks its own money on Reva.