Received a Tax Notice? Respond and Resolve with our Tax Experts.

Wondering how the latest Budget changes affect your tax liability?
Calculate Your Tax Liability for FY 2025-26

Don’t wait till the last minute! Start planning your tax savings today

Calculate Your Tax Liability for FY 2025-26
linkedin
whatsapp
  1. Home
  3. Income Tax
  5. NRI Taxation
  7. Section 115G: Tax Exemption for NRIs Explained

Section 115G in The Income Tax Act, 1961

Updated on: 07 Mar, 2025 01:07 PM

Section 115G of the Income Tax Act, 1961, provides provisions for Non-resident Indians (NRIs) regarding the filing of Income Tax Returns. This section primarily offers relief from filing income tax returns under specific conditions. To gain more insights into Section 115G, read this guide.

Contents

Provisions of Section 115G

Section 115G offers an exemption to non-residents earning income from India without a permanent establishment in the country.

Under this provision, NRIs are not required to file an ITR (Income Tax Return) in India if their total income consists solely of specified investment incomes or long-term capital gains, provided that tax has already been deducted at the source (TDS) on these earnings.

Exemptions and relief under DTAA

  • Non-residents can benefit from Double Taxation Avoidance Agreements (DTAA) that India has established with various countries.
  • These agreements prevent double taxation by ensuring the same income is not taxed in both countries.
  • If the DTAA prescribes a lower tax rate than Section 115G, the lower rate applies, offering significant tax savings for non-residents.

TDS Rates Under Section 115G

For incomes covered under Section 115G, the Income Tax Act specifies defined tax deducted at source (TDS) rates.

These rates vary based on the type of income. For example, interest earned on Indian securities or savings accounts held by non-residents is subject to a 20% TDS rate.

Documentation and compliance

To benefit from Section 115G and related provisions, it is essential to maintain proper documentation.

Non-residents should ensure they have all necessary documents readily available, such as tax residency certificates, PAN card details, and bank statements reflecting TDS deductions.

Understanding Section 115G can help NRIs optimize their tax obligations and avoid unnecessary filings. Book Online Consultation with CAs!

Frequently Asked Questions

Q- What is Section 115G of the Income Tax Act, 1961?

Section 115G provides provisions for Non-resident Indians (NRIs) regarding the filing of Income Tax Returns. It primarily offers relief from filing income tax returns under specific conditions.

Q- Who is eligible for relief under Section 115G?

NRIs who have earned income from investments in specified assets and have paid the applicable tax on such income are eligible for relief under Section 115G.

Q- What are the specified assets mentioned in Section 115G?

Specified assets include shares in an Indian company, debentures issued by an Indian company, deposits with an Indian company, and any security of the Central Government.

Q- Under what conditions is an NRI exempt from filing an income tax return under Section 115G?

An NRI is exempt from filing an income tax return if:

  • Their total earnings consist only of investment income or LTCG (long-term capital gains).
  • The tax due on such income has been deducted at the source.

Q- Can an NRI still file an income tax return if they are eligible for relief under Section 115G?

Yes, an NRI can choose to file an income tax return even if they are eligible for relief under Section 115G.

Q- What happens if an NRI has other sources of income apart from investment income or long-term capital gains?

If an NRI has other sources of income, they are required to file an income tax return, and the relief under Section 115G will not apply.

Trending Guides   New
Kamal Murarka

Kamal Murarka
Director - Tax Research & Operations

linkedin

Kamal Murarka, a Chartered Accountant, is the Director- Tax Research & Operations at Tax2win. He has been with the company since its inception, contributing his expertise in national and international tax assignments. He is also a recognized speaker on tax-related topics, representing Tax2win at various industry forums. His deep knowledge and strategic insights have been crucial in shaping Tax2win’s approach to tax research, operations, and client solutions, driving the company’s continued success.