AFAIK, dividends paid out by mutual funds are of two categories, ordinary and qualified. The ordinary dividends are taxed as ordinary income while the qualified dividends receive the favourable LTCG (Long term capital gains) treatment by the IRS.

Little bit of my background : I'm an Indian NRA (non resident alien), holding some equity investments including the FCNTX mutual fund, which pays both ordinary and qualified dividends every year.

Question : My question is with regards to the taxability of the qualified dividends in India. Since capital gains are not taxable in the US for NRAs, and qualified dividends are treated as LTCG in the US, there shouldn't be any US taxes on the qualified portion of the FCNTX dividends. However, as a tax resident in India, I'm liable to pay taxes on both dividends and capital gains (in this case qualified dividend).

And this is where things start to get complicated. How am I supposed to report these qualified gains as LTCG in India. Any LTCG to be reported in India will require an initial(cost basis) and a final(redemption/sale) value, as far as I know. But then for qualified dividends (that are treated as LTCG in the US), I'm not sure how to determine the cost basis or the final value. How do I figure this out?


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