How Does TDS Work on Your NRI Trading Account on Groww?

When you trade as an NRI, Groww deducts tax on your gains when you make them and pays it to the government for you. This guide walks through exactly what's deducted, at what rate, how losses reduce it, and how to read the statements you'll receive - with worked examples throughout.

Key Takeaways

• Tax on your trading gains is deducted at source (TDS) under Section 195 - Groww collects it and pays the government for you.
• It's calculated daily, separately for each income type: short-term and long-term capital gains, intraday, and F&O (equity and bonds).
• TDS applies only to your net gain after you set off eligible losses. Losses carry forward within the financial year and reduce future TDS.
• You can carry losses forward, but not profits. Once TDS is deducted, it isn't reversed - if you profit first and lose later, you reclaim the excess in your income-tax return (ITR).
• The ₹1.25 lakh long-term exemption and grandfathering don't apply at source; you claim them when you file.
• Mutual funds and dividends are taxed separately and aren't included here.

Why Is Tax Deducted at Source for NRIs?

For a resident investor, the investor pays the tax. For a non-resident, the law shifts that responsibility to the person making the payment - here, your broker.

Under Section 195, when an NRI earns taxable income in India, the payer must withhold the applicable tax before the money is fully available and deposit it with the government.

So when you sell and book a gain, Groww computes the tax on that gain and sets it aside as TDS. This keeps you compliant automatically - you don't have to estimate and pay advance tax yourself - and the amount withheld is fully credited to you.

If too much was withheld over the year (for example, because you had losses elsewhere or qualify for an exemption), you claim the difference back in your return.

What Is TDS Deducted On?

We deduct TDS on income from trading in your NRO Non-PIS account, across two broad categories:

Capital Gains

From buying and selling shares and bonds for delivery. Each is split by holding period:

• Short-term capital gains (STCG) - equity held for under 12 months; bonds per their holding-period rules.
• Long-term capital gains (LTCG) - held longer.

Business Income

From derivatives and same-day trading. The tax classification matters because it decides how losses can be used:

• Intraday is treated as speculative business income.
• F&O (futures & options) is treated as non-speculative business income.

*Not deducted here: tax on mutual-fund gains is deducted by the fund house (AMC), not by us, so we leave MFs out to avoid deducting twice. Dividend tax is handled separately. This guide is only about your trading gains.

The Tax Rates We Apply

Each rate has three parts: a base tax, a surcharge on that base, and a 4% health & education cess on the total. The effective rate is what actually gets deducted:

Here's how the effective rate is built, using an equity STCG gain of ₹10,000 as an example:

Base tax = 20% of ₹10,000 = ₹2,000.00

Surcharge = 15% of ₹2,000 = ₹300.00

Cess = 4% of ₹2,300 = ₹92.00

Total TDS (23.92%) = ₹2,392.00

These are the rates applied at source. Your actual liability may be lower depending on your total income and any treaty benefits - you reconcile that when you file your return.

How Your TDS Is Calculated Every Day

We work it out at the end of each trading day, separately for each income type:

• Total your profit or loss for the day in each segment.
• Reduce it by eligible losses - first any losses carried forward from earlier in the year, then eligible losses from other segments the same day (following the set-off rules below).
• Apply the rate to the remaining gain. That's your TDS for that income type.
• Debit the day's total in a single entry. On days with no net taxable gain, you deduct nothing and post no entry.

Because it's done daily, each day stands on its own. A loss you book after a taxed gain doesn't undo the earlier deduction - instead, it's carried forward to reduce tax on future gains. This is the single most important thing to understand, so it has its own section below.

How Losses Are Set Off

A loss in one segment can reduce a gain in another - but only in specific ways. Two rules govern it.

Rule 1 - Which losses can offset which gains

When you have a gain, we look for losses to set off in a fixed priority order (a loss already in the same segment is always used first):

Rule 2 - Intraday losses are ring-fenced

Because intraday is speculative, an intraday loss can be set off only against intraday gains - never against F&O, capital gains, or anything else. F&O losses (non-speculative) are more flexible and can reduce both F&O and intraday gains. That's why the table above is one-directional.

You can carry losses forward, but not profits. Any loss you don't use today is carried to later days in the same financial year and automatically reduces TDS on future gains in the eligible segments. But once TDS has been deducted on a gain, it is never reversed. So if you make a profit first and a loss later, the earlier TDS stays deducted, and you claim the excess back in your income-tax return. Carried-forward losses reset at the end of the financial year; anything unused is then carried into your return.

Worked Examples

Example 1 - A carried-forward loss reduces your tax

Monday: you sell equity shares at a short-term loss of ₹10,000. No gain, so no TDS. The ₹10,000 loss is carried forward.

Thursday: you sell other shares at a short-term gain of ₹30,000. We set off the ₹10,000 carried loss first, leaving ₹20,000 taxable.

Taxable STCG = ₹20,000.00

TDS at 23.92% = ₹4,784.00

Example 2 - Why business-income losses behave differently

Day 1: intraday loss ₹50,000, F&O profit ₹30,000. An intraday (speculative) loss can't reduce an F&O gain, so the F&O gain is taxed in full:

F&O taxable ₹30,000 → TDS at 39% = ₹11,700.00

The ₹50,000 intraday loss is carried forward.

Day 2: intraday profit ₹70,000, F&O loss ₹20,000. Now the F&O loss (₹20,000) can reduce the intraday gain, and the carried-forward intraday loss (₹50,000) reduces it too:

Intraday gain = ₹70,000.00

less F&O loss (same day) = -₹20,000.00

less intraday loss (carried forward) = -₹50,000.00

Taxable → TDS = ₹0.00

Example 3 - One loss cascading across several gains

On a single day, you book: F&O loss ₹20,000, intraday gain ₹2,000, equity STCG gain ₹8,000, equity LTCG gain ₹5,000.

Following the priority order, the F&O loss is used against each gain in turn:

Intraday ₹2,000 ← F&O loss ₹2,000 = taxable ₹0

STCG ₹8,000 ← F&O loss ₹8,000 = taxable ₹0

LTCG ₹5,000 ← F&O loss ₹5,000 = taxable ₹0

TDS today = ₹0.00

₹15,000 of the F&O loss was used; the remaining ₹5,000 is carried forward. No TDS today, and your statement shows exactly which loss reduced which gain.

Example 4 - A day with a net loss

You sell at an equity short-term loss of ₹5,000 and have no gains. There's no tax to deduct, and no debit is posted. The ₹5,000 is carried forward and will reduce your TDS on future short-term (or long-term) gains this financial year.

Reading Your Statements

You'll always be able to see how your TDS was calculated in the TDS report:

Your year-to-date statement

Any time, from Groww → Reports → TDS, you can download a statement with:

• A summary - total TDS deducted so far this year, broken down by income type, and your current carried-forward losses.
• A day-by-day detail - every day's booked P&L, the losses set off (shown separately for LTCG, STCG, intraday and F&O so you can see which pool reduced each gain), the taxable amount, and the TDS.

Tip: In the detailed view, read each row across - your booked P&L minus the four set-off columns equals the taxable amount. That's the whole calculation in one line.

What We Don't Adjust At Source (And Why)

A few benefits reduce your final tax but can't be applied accurately at the moment of deduction, because they depend on your full-year, all-sources picture. We deduct without them, and you claim them in your return.

The ₹1.25 lakh long-term exemption

Long-term capital gains on equity are exempt up to ₹1.25 lakh per year - but that limit applies once across all your long-term gains, including mutual funds and any other broker. If we applied it here, and you also used it elsewhere, too little tax would be withheld. So we deduct on the full long-term gain, and you claim the exemption when you file.

Grandfathering

When long-term tax on listed equity was reintroduced in 2018, gains built up before it were protected. For shares bought before 1 February 2018, the cost is taken as the higher of your actual cost or the market price on 31 January 2018 (capped at the sale price), so only gains after that date are taxed. This needs each stock's 31-Jan-2018 price and only helps older holdings, so we don't apply it at source; you get the benefit in your return.

Treaty (DTAA) relief

If you live in a country with a Double Taxation Avoidance Agreement (DTAA) with India, you may be entitled to a lower rate. Since this requires documentation (a tax residency certificate and Form 10F), we deduct at the standard statutory rate, and you claim treaty relief in your return.

When is TDS Deposited

After we deduct TDS, here's what happens on the compliance side:

• We deposit the tax with the government every month, by the 7th of the following month.
• Every quarter, we file a TDS return and issue you a TDS certificate (Form 16A).
• Form 16A is your proof that the tax was deducted and deposited - you use it to claim credit when filing your income-tax return, so you're not taxed twice on the same income.

Your TDS Certificate

You can download your TDS certificates from the Groww app as and when they become available.

Common Situations To Keep In Mind

• Shares transferred in from another broker: if your buy price isn't on Groww, we can't compute the gain, so TDS is calculated on the full sale value. Update your buy price before selling to avoid this.
• Losses in another account: we only see your Groww trades. We account for losses elsewhere in your return, not at source.
• Profit early in the year, loss later: we don't refund early TDS; the later loss carries forward, and any net excess comes back through your return.
• A big long-term gain: the ₹1.25 lakh exemption isn't applied here - expect TDS on the full gain and claim the exemption when you file.
• Keep your details current: your PAN and contact details drive your certificate and filing - keep them updated so nothing is held up.

Quick Glossary

Disclaimer - This article explains how TDS applies to your Groww NRO Non-PIS account and is for your understanding; it isn't tax advice. Rates and rules can change, and your final tax depends on your overall situation. For anything specific to you, please consult a qualified chartered accountant.