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A.S. 115C
1. NRI means an individual, being a citizen of India
or a person of Indian origin, who is not a ‘resident’.
2. Investment income: Income derived from a foreign exchange
asset (except dividend referred to in S. 115-O).
3. Foreign exchange assets: Specified asset acquired
by NRI out of convertible foreign exchange.
4. Specified assets are
i. Shares of an Indian company.
ii. Debentures or deposits with an Indian company, not being a private company.
iii. Any security of the Central Government.
iv. Other notified assets (no such asset has yet been notified.)
B.Ss. 115D and E : Computation of income
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Particulars
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Investment Income
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L.T.C.G.
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1.
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Deduction for Expenses
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Not allowed
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As per normal provision
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2.
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Chapter VI-A Deductions
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Not allowed
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Not allowed
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3.
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Tax Rate (excluding surcharge)
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20% plus surcharge
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10% plus surcharge*
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4.
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Exchange rate fluctuation provision – whether applicable?
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Not applicable
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No
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For applicability of surcharge refer paragraph 3B above
C.Sec. 115 F: Exemptions of long-term capital gains
Capital gains arising on transfer of a specified assets, is exempt from levy of
any tax on fulfilment of the following conditions:
i. The asset transferred must be a long-term capital asset.
ii. Net consideration must be invested in certain specified assets. (Refer para 10A
(4) above – Section 115C)
iii. Investment to be made within 6 months of transfer.
iv. If only a portion of the net consideration is reinvested, then proportionate
exemption is allowed.
v. New asset must be held for at least three years.
D.Sec. 115 G: Option not to file income-tax return
NRI need not file an income-tax return , if –
i. His total income consists only of investment income or income by way of long-term
capital gains or both and
ii. TDS has been deducted from such income.
E. Sec. 115 H : Continuation of benefits after NRI becomes
resident
Chapter XIIA shall continue to apply to investment income even after NRI becomes
a resident, if he furnishes a declaration along with Return of Income to that effect.
This benefit does not apply to dividend income from shares. However, as dividends
are now exempt from tax in shareholders’ hands, it does not make any difference.
F. Sec. 115 I: NRI may opt out of Chapter XIIA
An NRI may elect not to be governed by the provisions of Chapter XIIA for any A.Y.
by furnishing a written declaration to the A.O. with his return of income. If he
does so, his total income for that A.Y. shall be computed and tax on such total
income shall be charged in accordance with the other provisions of the Act.
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