Claiming Tax Benefits: Section 115H and NRIs in India!

Section 115H of the Income Tax Act, 1961, India, provides for a concessional tax rate for certain incomes earned by non-resident Indians (NRIs). The concessional tax rate is available for investment income and long-term capital gains.

The following are the key provisions of Section 115H:

• Applicability: Section 115H applies to NRIs who are not liable to tax in India in respect of their total income.
• Investment income: The concessional tax rate of 20% is available for investment income, such as interest, dividends, and rent.
• Long-term capital gains: The concessional tax rate of 10% is available for long-term capital gains, such as gains arising from the sale of shares, mutual funds, and other assets.
• Conditions: The concessional tax rate is available subject to the following conditions:
  • The NRI must have been a non-resident in India for at least 12 months in the previous year.
  • The investment income or long-term capital gains must arise from assets that are held outside India.

Here is an example of how Section 115H works:

• Mr. X is an NRI who is not liable to tax in India in respect of his total income. He earns interest income of Rs. 1 lakh from a bank account in the United States.
• The interest income is eligible for the concessional tax rate of 20%. This means that Mr. X will have to pay tax of Rs. 20,000 on the interest income.

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