TIS
Tiscon AG
stock NYSEAMERICAN

I am a resident Indian citizen with an Interactive Brokers (IBKR) account funded via LRS.
I want to invest in **QQQI** (NEOS Nasdaq-100 High Income ETF). In the US, a massive portion of this fund's monthly distribution is classified as **Return of Capital (ROC)** under Section 19(a) rather than an ordinary dividend. Under US law, this lowers your cost basis rather than being taxed immediately.
I have two main questions regarding Indian tax filing (ITR-2/3):
1. **Friction with IBKR:** Does IBKR automatically refund the 25% treaty withholding tax on the ROC portion at the end of the year for Indian Resident accounts (Non-Resident Aliens)? Or do they just report it as a standard gross distribution on Form 1042-S?
2. **ITR Reporting Mismatch:** How do I practically report this in India? If I manually treat it as a cost-basis reduction, it will mismatch the gross distribution amounts shown on the IBKR statements, which might trigger an AIS/TIS mismatch notice. Has anyone successfully defended the "ROC cost-basis reduction" argument during an Indian tax assessment, or is it safer to just declare it as foreign dividend income and claim the Foreign Tax Credit (FTC) via Form 67?

I am a resident Indian citizen with an Interactive Brokers (IBKR) account funded via LRS.
I want to invest in **QQQI** (NEOS Nasdaq-100 High Income ETF). In the US, a massive portion of this fund's monthly distribution is classified as **Return of Capital (ROC)** under Section 19(a) rather than an ordinary dividend. Under US law, this lowers your cost basis rather than being taxed immediately.
I have two main questions regarding Indian tax filing (ITR-2/3):
1. **Friction with IBKR:** Does IBKR automatically refund the 25% treaty withholding tax on the ROC portion at the end of the year for Indian Resident accounts (Non-Resident Aliens)? Or do they just report it as a standard gross distribution on Form 1042-S?
2. **ITR Reporting Mismatch:** How do I practically report this in India? If I manually treat it as a cost-basis reduction, it will mismatch the gross distribution amounts shown on the IBKR statements, which might trigger an AIS/TIS mismatch notice. Has anyone successfully defended the "ROC cost-basis reduction" argument during an Indian tax assessment, or is it safer to just declare it as foreign dividend income and claim the Foreign Tax Credit (FTC) via Form 67?