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As per the Income Tax Act of 1961, an individual can have 3 different types of residential statuses resident, resident not ordinarily resident, non-resident. An individual’s residential status depends on the number of days he/she has spent in the relevant country. However, this residential status keeps changing from year to year. Section 115H of the Income Tax Act applies to individuals who were NRIs in the previous year but have become residents in the current year.
Non-residents are allowed to avail of certain tax benefits under Chapter XII-A of the Income Tax Act. Under this chapter, the non-residents are allowed a special concession from tax on the income earned from foreign exchange asset investments. However, this special rate of tax is not applicable to resident Indians.
If an NRI becomes assessable as an Indian resident, they can avail of the benefits of Chapter XII-A. They have to present a written statement to the assessing officer. This statement should state their willingness to be covered under Chapter XII-A. This must apply to the investment income earned from foreign exchange assets.
If the non-resident provides a written statement to the assessing officer along with their Income Tax Return for the year in which they have to be assessed as a resident. In such a case, they can get the following benefits -
Given below are the provisions given under section 115H of the Income Tax Act -
NRIs can avail of the benefits under section 115H if they meet the following conditions -
Section 115H of the Income Tax Act offers NRIs significant tax advantages. To avail of these benefits, understanding the various aspects of section 115H is crucial. The best way to do this is to get advice from tax experts. Tax2win’s tax experts are always on their toes to help you with tax-related matters.
Section 115H allows individuals to avail of concessional tax rates on certain specified incomes earned by non-residents. Specified incomes can be defined as the income earned from specified assets that include long-term capital gains, short-term capital gains, and dividend income.
A non-resident is an individual who is a person of Indian origin but not a resident. If the individual’s grandparents or parents were born in India, then such a person is considered of Indian origin.
NRIs or non-resident Indians can claim the benefit of section 115H if they are residents in a nation with which India has signed the DTAA, furnished a tax residency certificate in the residing country, and earned income from specified assets under section 115H of the Income Tax Act.
