Section 115AC of Income tax act
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June 5, 2021
|7 mins read
Section 115AC of Income tax act – Special Provisions for Computing Tax on Income from Bonds or Global Depository Receipts
Under the provisions of the Income Tax Act, the following income would have concessional rate of tax mentioned against them : –
| Particulars | Rate of Tax |
Interest income of non-resident from following bonds purchased in foreign currency –
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10% |
| Dividend income (other than dividend referred to in Section 115-O) of non-resident from Global depository receipt which are : – a) Issued in accordance with scheme specified by the Central Government against the initial issue of shares of an Indian company; or b) Issued against the shares of a public sector company sold by the Government ; or c) Issued or re-issued in accordance with scheme specified by the Central Government against the existing shares of an Indian company.Note: Global Depository receipts are purchased by non-resident in foreign currency through an approved intermediary |
10% |
| Long-term capital gains income of non-resident arising from the transfer of above Bonds or GDRs | 10% |
Certain other provisions, relating to a non-resident who derived income by way of dividend and interest preferred above relating to the tax rates, obligation to file return of income and others are discussed as under : –
a) If the gross total income of the non-resident consists only of dividend and interest referred above
Where the gross total income of the non-resident consists only of the aforesaid dividend or interest income, no deduction shall be allowed to him under section 28 to 44C (relating to computation of taxable income under the head ” profits and gains of Business and profession”) or section 57(i) or 57(iii) (relating to computation of taxable income under the head ” income from other sources”) or under Chapter VIA.
b) If the gross total income of the non-resident consists income other than dividend and interest referred above
Where the gross total income of the non-resident consists of other incomes, then, the deduction under Chapter VI-A will be available in respect of other incomes [Section 115AC(2)]
c) Benefit of first and second proviso to Section 48 of Income Tax Act
The benefit of : –
- indexation ; and
- computation of capital gains in foreign currency,
shall not apply for the computation of long-term capital gains arising out of the transfer of long term bonds or long term GDRs.
d) Filing of Return of Income not Required
The non-resident shall not be required to furnish return under section 139(1), if –
- his total assessable income under the Act consists only of aforesaid interest or dividend income, and
- the tax deductible at source under Chapter XVII-B has been deducted from such income .
Tax on Income from Bonds or Global Depository Receipts acquired in course of amalgamation/demerger – Section 115AC(5) of Income tax act
Where the GDR or bonds referred to in Section 115AC of Income tax act, are acquired by the NR in the
- Amalgamated company by reason of amalgamation; or
- Resulting company by reason of demerger
by virtue of his holding GDR or bonds in the amalgamating or demerged company, concessional tax treatment would apply to such GDR or bonds.
Meaning of Global Depository Receipts
“Global Depository Receipts” means any instrument in the form of a depository receipt or certificate (by whatever name called) , created by the Overseas Depository Bank outside India and issued to investors against the issue of —
(a) ordinary shares of company listed on a recognised stock exchange in India; or
(b) foreign currency convertible bonds of issuing company;
Related Content
- Special Provisions Prescribed Under Chapter XII A of Income tax act
- Section 115a of Income Tax Act
- Section 115ab of Income tax act
- Section 115AD of Income tax act – Tax on Income of Foreign Institutional Investors
- Tax on Non Resident Sportsmen or Sports association
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