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What will my fund house deduct when I redeem, and how much comes back?

For a UAE NRI, the fund house (AMC) deducts tax on the gain before paying out. Your real tax can be lower. This shows both and the gap the return recovers.

Type of fund

65% or more in Indian equity: index, large-cap, flexi-cap, ELSS

How long have you held the units?
₹

= ₹5 Lakh

₹

= ₹15 Lakh

Your total Indian income this yearBoth sides use the band you pick
Comes back through your return

AMC deducts more than you owe on this redemption

₹16,250

The AMC usually deducts on the whole gain; the ₹1.25 lakh per-year exemption under Section 112A is claimed in your return, not at the counter.

Capital gain₹10,00,000
AMC deducts at redemption13.00% of the gain-₹1,30,000
Tax you actually owe12.5% above the ₹1.25 lakh exemption, plus surcharge and cess-₹1,13,750

A CA files the return with the exemption and your slab applied, and checks the rest of your Indian income for the same pattern. Refunds typically land 4 to 8 months after filing.

Have a CA claim this back

What to do with this number

Why the AMC deducts what it deducts

Equity vs debt, long vs short, and the rates the fund house is obliged to use for a non-resident.

File the return that recovers the gap

The exemption and your slab are applied in the return; that is the only place the excess comes back.

See the tax on shares or property instead

Same arithmetic for a direct equity sale or a property sale, with the treaty position for your country.

How this is worked out

  • Equity, long term (held more than 12 months): 12.5% under Section 112A. The AMC usually deducts on the full gain; you claim the ₹1.25 lakh yearly exemption in the return.
  • Equity, short term: 20% under Section 111A on both sides, so nothing to recover in the normal case.
  • Debt (units bought on or after 1 April 2023): the AMC deducts 30%; your tax is at new-regime slab rates on the gain added to your other Indian income (Section 50AA). Units bought before that date follow the older rules and are not modelled here.
  • Surcharge follows the income band you pick, capped at 15% on equity gains; 4% cess on both sides. Hybrid funds with 65% or more in equity follow the equity rules.
  • Capital gains on Indian fund units are taxable in India under the India-UAE treaty in the normal case, so the treaty does not lower these numbers.

Checked against the Income-tax Act and Rules on 10 September 2026. An estimate, not advice: your return decides.

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