How NRIs' Mutual Funds Get Taxed in U.S.
Bangalore: Mutual Funds are the best mode of investment in India because of a few advantages, like – tax free dividends and long term capital gains on equity funds. However, the scenario is very different for Indians living in the U.S. as the U.S. tax code charges taxes on the global income of its citizens.
Deepa Venkatraghvan, of the Times of India, gives a comprehensive look at how the U.S. tax code charges NRIs for their Indian Mutual Funds (MFs). In the U.S., taxes are charged on global income according to norms applicable to income earned in the U.S. MFs of foreign nations fall in this particular category.
In the U.S., annual gains received by selling an MF needs to be distributed to its unit holders, where it is taxed as 'capital gains distributions' in the name of the investor. These proceeds are taxed on the same ground as that of long term capital gains.
