What are specified assets under Chapter XII-A Section 115C?

Specified assets include shares, debentures, and deposits of Indian companies (non-private) and Central Government securities purchased using convertible foreign exchange remitted from abroad. NRO-funded investments do not qualify.

What happens to Chapter XII-A benefits when an NRI returns to India?

Under Section 115H, an NRI who becomes Resident can retain Chapter XII-A benefits on pre-existing specified assets by filing a declaration with the return for the first Resident year. Benefits continue until those assets are sold.

Special Tax Provisions for NRIs – Chapter XII-A (Sections 115C to 115I) | NDS Avla

Special Tax Provisions for NRIs – Chapter XII-A (Sections 115C to 115I) Advisory & Planning

Q: Can NRIs avoid filing an income tax return under Section 115G?

Yes. If the NRI has only investment income and long-term capital gains from specified assets and TDS at Chapter XII-A rates was correctly deducted, they are exempt from mandatory return filing under Section 115G.

Unlocking the Exclusive NRI Tax Regime for Specified Foreign Exchange Investments in India

The Income Tax Act, 1961 contains a dedicated chapter exclusively for Non-Resident Indians — Chapter XII-A (Sections 115C to 115I). This chapter provides a highly beneficial special tax regime for NRI investment income from "specified assets" — investments made in India using convertible foreign exchange. The regime offers a flat 20% tax rate on investment income, no mandatory indexation on long-term capital gains, a complete capital gains reinvestment exemption under Section 115F, and exemption from filing an income tax return under Section 115G. These are powerful provisions that are widely underutilized.

Chapter XII-A applies only to Non-Resident Indians — not OCI cardholders or PIOs holding foreign citizenship. The benefits can continue even after the NRI returns to India under Section 115H, making advance planning important for Returning Indians.

Chapter XII-A – Section-by-Section Advisory Services

Section 115C – Specified Assets

Advisory on which investments qualify as "specified assets" under Section 115C — shares, debentures, deposits of Indian companies, and government securities purchased using convertible foreign exchange.

Section 115E – 20% Flat Rate

Application of the 20% flat tax rate on investment income (interest, dividends) from specified assets — significantly lower than the 30% standard NRI rate and without the need for deduction claims.

Section 115F – Capital Gains Exemption

Claiming exemption from long-term capital gains on transfer of specified assets when the net consideration is reinvested in other specified assets within 6 months of the transfer — with no upper cap.

Section 115G – Return Filing Exemption

Advisory on the Section 115G exemption from mandatory return filing when total income consists only of investment income and long-term capital gains from specified assets with TDS correctly deducted.

Section 115H – Benefit Continuation

Structuring and declaration filing to continue Chapter XII-A benefits on pre-existing specified assets after the NRI returns to India and acquires Resident status — benefits continue until assets are sold.

Section 115I – Opt-Out Evaluation

Evaluating whether opting out of Chapter XII-A for a particular year results in lower overall tax under normal provisions — especially relevant for NRIs with significant Chapter VI-A deductions.

Why Chapter XII-A Is Underutilized

Most NRIs and their advisors are unaware the regime exists or which investments qualify as specified assets
The 20% flat rate applies without needing to claim deductions — simpler and often lower than slab rate computation
The Section 115F reinvestment exemption has no upper limit — unlike Section 54EC which caps at ₹50 lakh
Section 115G provides genuine relief from return filing for NRIs with only specified asset income
Section 115H benefit continuation planning must be done before returning to India — cannot be done retroactively
The annual opt-out (Section 115I) gives flexibility to switch to normal provisions in years where it is beneficial

Frequently Asked Questions

What are "specified assets" under Chapter XII-A and Section 115C?

Under Section 115C, "specified assets" include: shares in Indian companies (other than private companies) purchased using convertible foreign exchange; debentures issued by Indian companies (other than private companies) purchased in foreign exchange; deposits with Indian companies made in foreign exchange; Central Government securities; and any other asset specified by the Central Government. The critical requirement is that investments must have been acquired using convertible foreign exchange — funds remitted from abroad. Investments funded from NRO account balance (India-source funds) do not qualify.

Can NRIs avoid filing an income tax return under Section 115G?

Yes. Section 115G provides that an NRI is not required to file a return of income in India if: (a) their total income consists only of investment income and/or long-term capital gains from specified assets under Chapter XII-A; and (b) the appropriate TDS has been deducted at rates not less than Chapter XII-A rates. However, if the NRI has any other income, or if TDS was not correctly deducted, or if they wish to claim a refund or carry forward losses, filing a return remains necessary.

What happens to Chapter XII-A benefits when an NRI permanently returns to India?

Under Section 115H, a Returning NRI can retain Chapter XII-A benefits on specified assets acquired during their NRI period, even after becoming a Resident. The individual must furnish a declaration in the prescribed form to the Assessing Officer along with the return of income for the first year in which they become Resident. This declaration cannot be filed retrospectively — if missed in the first Resident year, the benefit is permanently lost. Timing and compliance are critical.

When should an NRI opt out of Chapter XII-A under Section 115I?

Section 115I allows an NRI to declare in any financial year that Chapter XII-A provisions shall not apply to them for that year. This is beneficial when the normal tax computation — using slab rates with all applicable Chapter VI-A deductions (80C, 80D, etc.) and standard deductions — results in lower tax than the Chapter XII-A 20% flat rate on investment income. Since opting out is done year-by-year (not a permanent exit), NRIs can switch between regimes annually to choose whichever is more tax-efficient.

Are You Using Chapter XII-A? Most NRIs Are Not.

Our experts identify whether Chapter XII-A applies to your investments, file the right declarations, claim Section 115F reinvestment exemptions, and advise on Section 115H planning before your return to India.

F.A.Q.

What is GSTR-9 and why is it required?

GSTR-9 is an annual GST return that summarizes all transactions reported during the financial year. It is required to ensure proper reconciliation and compliance with GST laws.

Who is required to file GSTR-9?

All regular GST-registered taxpayers are required to file GSTR-9, except composition dealers, casual taxable persons, and non-resident taxpayers.

What is the due date for filing GSTR-9?

The due date is generally 31st December following the end of the relevant financial year, unless extended by the government.

What details are included in GSTR-9?

It includes details of outward supplies, inward supplies, input tax credit claimed, taxes paid, and adjustments made during the year.

Is GSTR-9 mandatory for all taxpayers?

GSTR-9 is mandatory for most regular taxpayers, but certain small taxpayers may get exemptions based on turnover thresholds notified by the government.

What happens if GSTR-9 is not filed on time?

Late filing may result in penalties and late fees, along with potential compliance issues or notices from GST authorities.