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,
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Shares in an Indian company;
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debentures issued by an Indian company, which is not a private company as defined in the Companies Act 1956;
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deposits with an Indian company which is not a private company as defined in the Companies Act 1956;
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any security of the Central Government as defined in Section 2(2) of the Public Debt Act 1944;
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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 . |
