Indian Mutual Funds reporting/taxes on US Tax Filings
Posted: Tue Jun 21, 2011 6:19 pm
Hi
I have USC, OCI, working and residing in India for the past 3 years.
Last year (2010) I have purchased few Indian MF and towards the year end I sold them.
My US Tax filing company representative has communicated few things wrt to Indian MF report on US Tax filing, which made me un-believable, just want to confirm. Precisely this is what she mentioned:
- Within the FY 2010, provide the MF purchase date, NAV on the date of purchase, and year end NAV. You need to pay the tax on that (even if you have not sold).
Means, by just holding the Indian MF (and not selling), itself will force you to pay the tax on the gain.
(She said that though this is a paper gain or loss, until you really sell it. But you still need to pay the tax on it).
This appears astonishing to me.
Is she correct in saying that, you have to pay the tax for year end gains (even if that gain is paper gain)?
2nd issue:
________
I have not filed my Indian tax return for this year. If the gains are there I will be paying the tax to Indian Govt on the Capital Gains. Then I will have to pay the tax 2 times.
Is that right?
For that she said that, if you pay tax for Indian Govt in on the MFs Capital gain in 2011 to Indian Government, you may claim that back on 2011 tax filing with IRS, in the 2012.
Is she right?
(Also, Some of the mutual funds, based on the holding period, we may not pay the Indian tax at all to Indian Govt.. In that case, can I still go ahead and make a claim on 2011 US tax filing, when I do it in 2012)?
Please help me to understand this mistery and motive behind this US policy of paying taxes on unrealised Mutual Fund gains/losses.
Regards
Srikal
I have USC, OCI, working and residing in India for the past 3 years.
Last year (2010) I have purchased few Indian MF and towards the year end I sold them.
My US Tax filing company representative has communicated few things wrt to Indian MF report on US Tax filing, which made me un-believable, just want to confirm. Precisely this is what she mentioned:
- Within the FY 2010, provide the MF purchase date, NAV on the date of purchase, and year end NAV. You need to pay the tax on that (even if you have not sold).
Means, by just holding the Indian MF (and not selling), itself will force you to pay the tax on the gain.
(She said that though this is a paper gain or loss, until you really sell it. But you still need to pay the tax on it).
This appears astonishing to me.
Is she correct in saying that, you have to pay the tax for year end gains (even if that gain is paper gain)?
2nd issue:
________
I have not filed my Indian tax return for this year. If the gains are there I will be paying the tax to Indian Govt on the Capital Gains. Then I will have to pay the tax 2 times.
Is that right?
For that she said that, if you pay tax for Indian Govt in on the MFs Capital gain in 2011 to Indian Government, you may claim that back on 2011 tax filing with IRS, in the 2012.
Is she right?
(Also, Some of the mutual funds, based on the holding period, we may not pay the Indian tax at all to Indian Govt.. In that case, can I still go ahead and make a claim on 2011 US tax filing, when I do it in 2012)?
Please help me to understand this mistery and motive behind this US policy of paying taxes on unrealised Mutual Fund gains/losses.
Regards
Srikal