The 60-second version
Section 196B requires 10% TDS on income from units of offshore funds purchased in foreign currency by non-resident unit holders — distinct from 196A mutual funds.
196B is offshore fund lane — not Indian mutual fund 196A
Section 196B applies to income from units of an offshore fund purchased in foreign currency by non-resident investors.
Fund administrator deducts 10% TDS — claim treaty relief via Form 67 if applicable.
Indian MF lane: Section 196A guide.
Fund income TDS
| Section | Rate | Asset |
|---|---|---|
| 196B | 10% | Offshore fund units |
| 196A | 20% | Indian mutual funds |
| 196D | 20% | FII securities |
| 195 | Treaty | Other NRI income |
196B sequence
Confirm fund type
Offshore vs Indian AIF.
FCY purchase proof
Subscription docs.
TDS statement
From fund admin.
Form 67
If treaty relief.
ITR
Declare if required.
Flow
196B kit
- Fund stmt.
- FCY wire proof.
- TDS cert.
- Form 67.
- 26AS.
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US PFIC
Offshore funds often trigger US PFIC Form 8621 — separate from Indian 196B.
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Indian AIF?
Usually 196A or capital gains — not 196B.
DTAA relief?
Form 67 + TRC for reduced WHT.
Become resident?
Global income taxed — Schedule FA mandatory.
No TDS cert?
Chase fund admin before India ITR.
Redemption?
Capital gains rules may apply on exit — verify fund structure.
FBAR?
Foreign fund account in USD 10k aggregate test.
Your tax year is already running.
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