All Investors (Individual/Non-Individual/Resident Indians/NRIs/OCIs etc.) in the Fractions shall be paying taxes on Income payouts and on capital appreciation.
Income Distribution: Income received from the asset is distributed as dividend/Interest on the Shares/CCDs as Fractions represent the Shares/CCDs of SPV holding the Asset. It is taxable in the hands of the investors at the applicable tax rates.
Capital Gains: Capital Gains is subject to capital gains tax at applicable rates. The applicable tax rate would depend on the period for which the shares and debentures were held (short-term vs long-term).
Unlisted Debentures (Individual/Non-Individual Investor(s)):
Income distributed through Interest Payment
| Income Distributed through Interest Payment | Tax Rate | TDS Rate (If any) |
|---|---|---|
| Resident Indians | Slab Rate | 10% |
| NRI/OCIs | Slab Rate | 20% (plus appl. Surcharge & Cess) |
Capital Gains on the Unlisted Debentures
| STCG/LTCG on Unlisted Debentures | Holding Period | STCG/LTCG Tax Rate | TDS Rate (If any) |
| Resident Indians | Regardless of holding period | Slab Rate | NIL |
| NRI/OCIs | Regardless of holding period | Slab Rate | 20% (plus appl. Surcharge & Cess) |
Unlisted Common/Preference Shares (Individual/Non-Individual Investor(s)):
Income distributed through Dividend/Pref Dividend Payment
| Income Distributed through Dividend Payment | Tax Rate | TDS Rate (If any) |
| Resident Indians | Slab Rate | 10% |
| NRI/OCIs | Slab Rate | 20% (plus appl. Surcharge & Cess) |
Capital Gains on the Common/Pref Shares
| STCG on Unlisted Common/Pref Shares | Holding Period | STCG Tax Rate | TDS Rate (If any) |
| Resident Indians | <=24 Months | Slab Rate | NIL |
| NRI/OCIs | <=24 Months | Slab Rate | 20% (plus appl. Surcharge & Cess) |
| LTCG on Unlisted Common/Pref Shares | Holding Period | LTCG Tax Rate | TDS Rate (If any) |
| Resident Indians | >24 Months | 12.5% | NIL |
| NRI/OCIs | >24 Months | 12.5% | 12.5% (plus appl. Surcharge & Cess) |
The above gives you a glimpse of taxation on investments, however, we advise all investors to consult their Financial Advisors/Tax Advisors to seek individual specific tax advice.
Resident Indians can submit Form 15G/15H and NRIs can submit Tax residency Certificate(TRC) for reduced TDS. NRIs can explore benefits under the Double Taxation Avoidance Agreement (“DTAA”) entered with the respective country, subject to the availability of a Tax residency Certificate.