[CHAPTER XII-A
Special
provisions relating to CERTAIN INCOMES of non-residents
115C.In this Chapter, unless the context otherwise
requires,—
(a) “convertible
foreign exchange” means foreign exchange which is for the time being treated by
the Reserve Bank of India as convertible foreign exchange for the purposes of
the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made
there under;
(b) “Foreign
exchange asset” means any specified asset which the assesses has acquired or
purchased with, or subscribed to in, convertible foreign exchange;
(c) “Investment
income” means any income derived [other than dividends referred to in section
115-O] from a foreign exchange asset;
(d) “Long-term
capital gains” means income chargeable under the head “Capital gains” relating
to a capital asset, being a foreign exchange asset which is not a short-term
capital asset;
(e) “Non-resident
Indian” means an individual, being a citizen of India or a person of Indian
origin who is not a “resident”.
Explanation.—A person shall be deemed to be of Indian
origin if he, or either of his parents or any of his grand-parents, was born in
undivided India;
(f) “Specified
asset” means any of the following assets, namely:—
(i) shares in an Indian company;
(ii) debentures issued by an Indian company which is not a
private company as defined in the Companies Act, 1956 (1 of 1956);
(iii) deposits with an Indian company which is not a private
company as defined in the Companies Act, 1956 (1 of 1956);
(iv) Any
security of the Central Government as defined in clause (2) of section 2
of the Public Debt Act, 1944 (18 of 1944);
(v) Such
other assets as the Central Government may specify in this behalf by notification
in the Official Gazette.
Special provision
for computation of total income of non-residents.
115D.(1) No
deduction in respect of any expenditure or allowance shall be allowed under any
provision of this Act in computing the investment income of a non-resident
Indian.
(2) Where in the case of an assesses, being a
non-resident Indian,—
(a) the
gross total income consists only of investment income or income by way of
long-term capital gains or both, no deduction shall be allowed to the assesses [under
Chapter VI-A and nothing contained in the provisions of the second proviso to section
48 shall apply to income chargeable under the head “Capital gains”];
(b) the gross total income includes any income referred to in clause (a), the gross total income shall be reduced by the amount of such income and the deductions under Chapter VI-A shall be allowed as if the gross total income as so reduced were the gross total income of the assesses.
[Tax on investment income and long-term
capital gains.
115E.Where the total income of an assesses, being a
non-resident Indian, includes—
(a) Any
income from investment or income from long-term capital gains of an asset other
than a specified asset;
(b) Income
by way of long-term capital gains,
The tax payable by him shall be the aggregate
of—
(I) the
amount of income-tax calculated on the income in respect of investment income
referred to in clause (a), if any, included in the total income, at the
rate of twenty per cent;
(ii) the
amount of income-tax calculated on the income by way of long-term capital gains
referred to in clause (b), if any, included in the total income, at the
rate of ten per cent; and
(iii) The
amount of income-tax with which he would have been chargeable had his total
income been reduced by the amount of income referred to in clauses (a)
and (b).]
Capital gains on
transfer of foreign exchange assets not to be charged in certain cases.
115F.(1) Where, in the case of an assesses being a non-resident Indian, any
long-term capital gains arise from the transfer of a foreign exchange asset
(the asset so transferred being hereafter in this section referred to as the
original asset), and the assesses has, within a period of six months after the
date of such transfer, invested [***] the whole or any part of the net
consideration in any specified asset [***], or in any savings certificates
referred to in clause (4B) of section 10 (such specified asset [***], or
such savings certificates being hereafter in this section referred to as the
new asset), the capital gain shall be
dealt with in accordance with the following provisions of this section,
that is to say,—
(a) If
the cost of the new asset is not less than the net consideration in respect of
the original asset, the whole of such capital gain shall not be charged under section
45;
(b) If
the cost of the new asset is less than the net consideration in respect of the
original asset, so much of the capital gain as bears to the whole of the
capital gain the same proportion as the cost of acquisition of the new asset
bears to the net consideration shall not be charged under section 45.
Explanation.—for the purposes of this sub-section,—
(I) “Cost”,
in relation to any new asset, being a deposit [***] referred to in sub-clause (iii),
or specified under sub-clause (v), of clause (f) of section 115C,
means the amount of such deposit;
(ii) “net
consideration”, in relation to the transfer of the original asset, means the
full value of the consideration received or accruing as a result of the
transfer of such asset as reduced by any expenditure incurred wholly and
exclusively in connection with such transfer.
(2) Where the new asset is transferred or converted (otherwise than by transfer) into money, within a period of three years from the date of its acquisition, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head “Capital gains” relating to capital assets other than short-term capital assets of the previous year in which the new asset is transferred or converted (otherwise than by transfer) into money.
Return of income
not to be filed in certain cases.
115G.It shall not be necessary for a non-resident
Indian to furnish under sub-section (1) of section 139 a return of his income
if—
(a) his
total income in respect of which he is assessable under this Act during the
previous year consisted only of investment income or income by way of long-term
capital gains or both; and
(b) The
tax deductible at source under the provisions of Chapter XVII-B has been
deducted from such income.
Benefit under
Chapter to be available in certain cases even after the assesses becomes resident.
115H.Where a person, who is a non-resident Indian
in any previous year, becomes assessable as resident in India in respect of the
total income of any subsequent year, he may furnish to the [Assessing] Officer
a declaration in writing along with his return of income under section 139 for
the assessment year for which he is so assessable, to the effect that the
provisions of this Chapter shall continue to apply to him in relation to the
investment income derived from any foreign exchange asset being an asset of the
nature referred to in sub-clause (ii) or sub-clause (iii) or
sub-clause (iv) or sub-clause (v) of clause (f) of section
115C; and if he does so, the provisions of this Chapter shall continue to apply
to him in relation to such income for that assessment year and for every
subsequent assessment year until the
transfer or conversion (otherwise than by transfer) into money of such assets.
Chapter not to
apply if the assesses so chooses.
115-I.A non-resident Indian may elect not to be governed by the provisions of this
Chapter for any assessment year by furnishing [his return of income for that assessment year
under section 139 declaring therein] that the provisions of this Chapter shall
not apply to him for that assessment year and if he does so, the provisions of
this Chapter shall not apply to him for that assessment year and his total income for that assessment
year shall be computed and tax on such
total income shall be charged in accordance with the other provisions of this
Act.]