Specified Foreign Exchange Assets Income From Which Is Eligible For The Special Provisions Of Assessment

[ Special Procedure of Assessment regarding Income of an NRI from Foreign Exchange Assets. ]

It is not that every type of income of a non-resident Indian is entitled to the uniform rate of income tax of 20%. It is only certain selected assets, the income of which alone would be liable to the special provisions of assessment in the case of non-resident Indians. Such assets are known as “foreign exchange asset”. Under Section 115C(b) “foreign exchange assets” would mean any specified asset which the assessee has acquired or purchased or subscribed with or subscribed in a convertible foreign exchange. The expression “convertible foreign exchange”, according to Section 115C(a)means, foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of Foreign Exchange Regulation Act 1973, and any rules made under it. Investment income means any income which is derived from foreign exchange assets. Under Section 115C(f) “specified assets” means any of the following assets, namely,

  1. Shares in an Indian company;

  2. debentures issued by an Indian company, which is not a private company as defined in the Companies Act 1956;

  3. deposits with an Indian company which is not a private company as defined in the Companies Act 1956;

  4. any security of the Central Government as defined in Section 2(2) of the Public Debt Act 1944;

  5. such other assets as the Central Government may specify in this behalf by notification in the Official Gazette.

Thus, only five types of assets acquired or purchased out of convertible foreign exchange can be termed as specified assets, more popularly known as “foreign exchange assets”. It is the investment income from such foreign exchange assets which alone is entitled to a special treatment under Chapter XII-A of the Income Tax Act .

 
Special Procedure of Assessment regarding Income of an NRI from Foreign Exchange Assets
1. Special Provision Of Computation Of The Total Income Of A Non-Resident Indian
2. Who Is A Non-Resident Indian For The Purposes Of These Special Provisions?
3. Specified Foreign Exchange Assets Income From Which Is Eligible For The Special Provisions Of Assessment
4. Income Tax On Investment Income And Long-Term Capital Gains Of An NRI
5. When Is No Income Tax Payable On The Long-Term Capital Gains Of Foreign Exchange Assets?
6. A Non-Resident Indian Need Not File Any Income Tax Return In Certain Cases
7. When Does The Special Procedure Continue To Apply To A Person Even After He Becomes A Resident In India?
8. NRIs Have The Option Not To Be Governed By The Special Provisions
9. Tax Planning Guidelines For An NRI Having Income From Foreign Exchange Assets As Well As Other Income
 
 
 
 
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