Spain NRIs · Capital Gains Tax

Capital gains tax on Indian shares and mutual funds for NRIs in Spain

Selling Indian equity or mutual funds from Spain can trigger Indian capital-gains tax. Here's what the treaty allows, what your AMC withholds, and how to reclaim the excess.

If you invest in Indian listed shares or mutual funds while living in Spain, the treaty decides whether India can tax the gain at all. Article 14 gives Spain the sole right to tax gains on a holding below 10%, which is what an ordinary portfolio position is, so India cannot tax it. India taxes only a stake of 10% or more, or a company whose value sits mainly in Indian property. Where India does tax, the long-term rate is 12.5%. When you redeem, your broker or AMC withholds tax on the gain before paying you, often at a flat rate that runs ahead of what you actually owe once the ₹1.25 lakh long-term exemption and your holding period are applied. The over-withheld amount comes back through your Indian return.

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India-Spain key facts: capital gains tax

Default non-resident TDS rate	12.5%
What the treaty changes here	It sets no lower rate on this income. What a treaty decides here is which country gets to tax it.
Treaty article / basis	Article 14: India taxes a holding of at least 10% or a property-rich company; a portfolio holding below 10% is taxable only in Spain, so India cannot tax it
Your TRC issuing authority	the Agencia Tributaria (AEAT)

Rates reflect India's domestic withholding under Section 393(2) (Section 195 until 31 March 2026) and the India-Spain treaty. Surcharge and cess apply on top where relevant.

How it works on the India side

Indian capital-gains tax on equity and equity mutual funds follows Sections 198 and 196 (Sections 112A and 111A under the 1961 Act): long-term gains, held over a year, are taxed at 12.5% above a ₹1.25 lakh annual exemption, and short-term gains at 20%, after the Budget 2024 changes. For an NRI, the AMC or broker deducts TDS on the gain at redemption, and because they apply a flat rate without your annual exemption or the full holding-period detail, the deduction is frequently more than your real liability.

The correction happens on your return. You compute the gain properly across all your folios and brokers, apply the exemption and the right rate per holding period, and set the TDS already deducted against it. Where the TDS exceeded the actual tax, which is common once the exemption is applied, the excess is refunded. Two things catch people out: getting the cost basis right across multiple brokers, and the rule that a non-resident cannot set an unused basic exemption limit against these gains the way a resident can.

What changes because you live in Spain

Elect Spain's Beckham regime and you quietly lose the India treaty rate. Under article 93 LIRPF you stay a Spanish resident but you're taxed like a non-resident for the year you move plus the five after it, so your Indian interest, dividends, rent, share gains and property gains stay outside the Spanish net. That's exactly why AEAT's own manual says people on this option aren't residents for the purposes of a double tax convention. You can still ask for a Spanish residence certificate, but you only get the plain anexo 9 model under Orden HAC/3626/2003, never the anexo 10 treaty version, and that's the one India wants before it will apply the treaty rate. Nothing on the Spanish side softens the hit either, because the credit this regime allows covers foreign employment and business income only and stops at 30% of the Spanish tax on it. Only an Indian refund claim gets it back.

Frequently asked questions

Common questions from Spanish NRIs

It turns on the size of your stake, not on where you live. Under Article 14 a holding below 10% is taxable only in Spain, so India taxes nothing on an ordinary portfolio position. On a stake of 10% or more, or a property-rich company, India taxes long-term gains at 12.5% above a ₹1.25 lakh annual exemption and short-term gains at 20% (Sections 198 and 196, formerly 112A and 111A). Any TDS your AMC over-withheld comes back on your Indian return.

Because the AMC can't see the size of your stake or your purchase dates, it withholds at the flat Indian rate as if India could tax the gain. On the positions where the India-Spain treaty gives Spain the sole taxing right, your correct Indian tax is nil, so the refund is the entire amount deducted rather than a top slice of it. You claim it by filing an Indian return with the treaty position and the evidence behind it, which means stake size or purchase dates per lot.

Go further

Read the full guide, or see your country's complete picture

NRI capital-gains ITR across multiple brokers Spain NRI tax guide: every income type and the rates that apply

Capital Gains Tax sorted, by an Indian CA who works with Spanish NRIs

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