Are your Indian share and mutual fund gains taxable in India if you live in Brazil?

Yes, on both. India taxes a non-resident on income that arises in India, and a gain on an Indian share or an Indian mutual fund unit arises in India. The India-Brazil treaty does not take that right away. Its capital gains article, Article 13, lets India tax gains on Indian immovable property, on shares of an Indian company, and, through its residual clause, on any other Indian property. So whether you sell direct shares or redeem fund units, India keeps the right to tax the gain.

This is the opposite of what a Singapore or Dubai resident gets. Those treaties make most share and unit gains taxable only in the country of residence, which taxes them lightly or not at all. The India-Brazil residual clause runs the other way: gains on any property not covered by the earlier paragraphs may be taxed in both Contracting States. So the escape route that works from Singapore is closed from Brazil, and your fund house and broker are right to treat the gain as taxable in India.

The units-are-not-shares argument rests on the wording of the residual clause, and Brazil's wording defeats it. A mutual fund unit is issued by a trust, not by a company, so in law a unit is not a share. In 2025 the Mumbai Tribunal used exactly this point in Anushka Sanjay Shah: for a Singapore resident, fund unit gains were not shares, so they fell into the India-Singapore residual clause, Article 13(5), which taxes only in the country of residence. Singapore does not tax them, so nothing was payable in either place.

That result turns on the Singapore residual clause being residence-only. The India-Brazil residual clause is not. It says gains on any property other than the property in the earlier paragraphs may be taxed in both Contracting States. So even if your fund units land in the residual clause as the tribunal said units do, that clause still lets India tax them. The units-are-not-shares point is correct in Brazil too, and it changes nothing, because the residual box it puts you in is a taxable one here.

The Indian tax depends on what you sold. The three common cases:

The 12.5% long-term rate and the 20% short-term rate apply to sales on or after 23 July 2024, and the Rs 1.25 lakh yearly exemption is available to you as an NRI. There is no indexation and no currency-fluctuation relief on fund gains. Debt mutual funds that hold more than 65% in debt, bought on or after 1 April 2023, are always taxed as short-term at your slab rate, however long you held them, so there is no 12.5% rate for those.

Brazil taxes the same gain, but not at its top personal rate. Since 1 January 2024, Law 14.754/2023 puts a Brazilian resident's income from foreign financial investments, which covers gains on foreign shares and investment fund units, into a separate box taxed at a flat 15% on the annual return, with no deductions. Indian property is different: a gain on an Indian flat keeps the separate Brazilian capital-gains rules, not this 15%, which is why property sits on our worldwide-income page instead.

You are not taxed twice. Under Article 23 of the treaty, Brazil credits the Indian tax you paid on the gain against its own 15%, so you top up only the difference. If the Indian tax already equals or beats 15%, the extra Brazilian tax is nil. The credit only reaches up to Brazil's 15%, so if the Indian tax is higher, that excess is an Indian cost you recover in India, not in Brazil. Your contador claims the credit, so hand them the Indian gain and the tax paid, with dates.

Tax often comes out before the right rate can be applied. When you redeem Indian mutual fund units, the fund house deducts TDS on your gain under Section 195, which becomes Section 393(2) from FY 2026-27, and it cannot apply your final rate or your Rs 1.25 lakh exemption for you. Listed shares sold on the exchange are usually settled without tax at source, so there you pay through advance tax and your return instead.

You set it right by filing an Indian return, ITR-2, showing the gain at the correct 12.5%, 20% or slab rate, and any TDS over-deducted comes back as a refund with interest. You support the return with a Tax Residency Certificate from the Receita Federal and Form 10F, which becomes Form 41 from FY 2026-27. If a redemption is large and you would rather not wait for the refund, a lower-deduction certificate under Section 197, now Form 128 under Section 395, before you redeem brings the TDS down to the real tax up front.

Priya, 43, is a product manager in Sao Paulo and a Brazilian tax resident. She redeems Indian equity mutual funds and books a long-term gain of Rs 10 lakh.

India taxes the gain above the Rs 1.25 lakh exemption, so Rs 8.75 lakh at 12.5% under Section 112A, about Rs 1,09,375 before the mandatory 4% cess. The fund house deducts TDS on the redemption, which Priya trues up on her ITR-2 with her Receita Federal Tax Residency Certificate and Form 10F, now Form 41. Brazil then taxes the same gain as foreign financial-investment income at its flat 15%, on Brazil's own reais computation roughly Rs 1,50,000, and credits the Rs 1,09,375 of Indian tax under Article 23. So Priya tops up about Rs 40,625 in Brazil, and her total lands near Brazil's 15%, not its 27.5% top rate. A Singapore resident would have paid nothing on this fund gain, but Priya cannot, because the India-Brazil treaty lets both countries tax it.