Indian accumulation debt mutual fund taxation
Posted: September 5th, 2018, 1:29 am
I have not seen this before on this forum, if so please point me in the right direction.
I was planning to invest in Debt Mutual Funds(denominated in Rupees) in India. Basically it is like a open ended unit trust where the manager has (short dated in my case) Indian bonds denominated in Rupees. It is of type "Growth", which means that the interest is not distributed but is in put into the trust; probably similar to accumulation units in UK.
If the debt mutual fund is sold, in India, after 3 years, the capital gains can be close to zero. What will be the taxation in UK, I am UK resident and domiciled for tax purposes.
If I invest, say Rs 900,000 (worth £10,000) and after 3 years sell for (say) Rs 1,125,000(say worth £11,000 based on exchange rate on that day).
* do I need to find out the real income each year and pay tax each year on income I did not get (yet). It may not be easy to get real income numbers
* do I treat the profit of Rs 225000 as gains and pay CGT in UK in the year I sell the bond?
* do I treat the profit of Rs 225000 as income, and pay income tax on it in UK in the year I sell the bond?
* or ???
A example of such a mutual fund is https://www.valueresearchonline.com/fun ... ecode=2431
I was planning to invest in Debt Mutual Funds(denominated in Rupees) in India. Basically it is like a open ended unit trust where the manager has (short dated in my case) Indian bonds denominated in Rupees. It is of type "Growth", which means that the interest is not distributed but is in put into the trust; probably similar to accumulation units in UK.
If the debt mutual fund is sold, in India, after 3 years, the capital gains can be close to zero. What will be the taxation in UK, I am UK resident and domiciled for tax purposes.
If I invest, say Rs 900,000 (worth £10,000) and after 3 years sell for (say) Rs 1,125,000(say worth £11,000 based on exchange rate on that day).
* do I need to find out the real income each year and pay tax each year on income I did not get (yet). It may not be easy to get real income numbers
* do I treat the profit of Rs 225000 as gains and pay CGT in UK in the year I sell the bond?
* do I treat the profit of Rs 225000 as income, and pay income tax on it in UK in the year I sell the bond?
* or ???
A example of such a mutual fund is https://www.valueresearchonline.com/fun ... ecode=2431