ITR Filing: Can NRIs claim refund on short-term capital gains tax if income is below the exemption limit?

Representative image

Expert Advice: Under Indian tax laws, certain incomes are taxed at slab rates (such as salary, business income, and interest), while others are taxed at special rates. For example, long-term capital gains (LTCG) and short-term capital gains (STCG) from listed shares and equity-oriented schemes are taxed at special rates of 12.5% and 20%, respectively.

Resident taxpayers can set off the shortfall in their basic exemption limit against LTCG or STCG from listed shares and equity schemes. For instance, an 85-year-old resident with normal income of Rs 3 lakh and STCG of Rs 5 lakh can adjust the Rs 2 lakh shortfall in their exemption limit (Rs 5 lakh for super seniors) against STCG and pay tax only on the balance Rs 3 lakh.

However, this benefit is not available to NRIs. As an NRI, you must pay the full tax on your STCG—20% on gains realized on or after July 23, 2024, and 15% on gains realized before this date. The bank would have already deducted the applicable tax. Hence, you cannot claim a refund of the tax deducted. Since your total income does not exceed the basic exemption limit, you are also not required to file an Income Tax Return (ITR).