Can an Australian NRI get exemption on capital gains?

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—Name withheld on request.I assume that you are a non-resident as per Indian tax law. Liquid funds typically invest in a portfolio of money market and short-term debt securities, and since investment in equity shares of domestic listed companies is less than 35% of its total portfolio, they do not meet the criteria of being an equity-oriented fund.

For units of mutual funds other than equity-oriented funds, the period of holding to qualify as a long-term capital asset is three years. The period of holding as per your facts exceeds three years.

For debt-mutual funds, TDS on long-term capital gains for NRIs is 10% without indexation benefit (plus applicable surcharge and cess) and so would the final tax, too.Read more: Large-caps & Reits: India’s largest investment adviser’s shifts The Finance Act 2023 made certain amendments in lieu of which capital gains on sale of debt mutual funds are deemed to be treated as short-term capital gains irrespective of the period of holding. However, the amendment applies for any units purchased after 1 April 2023, and thus it would not apply in your case.Under the India-UAE double taxation avoidance agreement (DTAA), mutual fund units qualify as ‘property’ not described under other paragraphs of the capital gains article under the DTAA.

Therefore, as per residual clause of article 13(5), the sole taxation rights on sale of mutual funds are allocated to the UAE. Whereas the capital gains article under the India-Australia DTAA is worded slight differently than under the India-UAE DTAA.