Section 115AC - Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer - Income-tax Act, 1961

1 [Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer. 115AC. (1) Where the total income of an assessee, being a non-resident, includes- ( a ) income by way of interest on bonds of an Indian company issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, or on bonds of a public sector company sold by the Government, and purchased by him in foreign currency; or ( b ) income by way of 7 [ dividends ] on Global Depository Receipts- ( i ) issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, against the initial issue of shares of an Indian company and purchased by him in foreign currency through an approved intermediary; or ( ii ) issued against the shares of a public sector company sold by the Government and purchased by him in foreign currency through an approved intermediary; or ( iii ) 3 [issued or ] re-issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, against the existing shares of an Indian company purchased by him in foreign currency through an approved intermediary; or ( iv ) 4 [ *** ] ( c ) income by way of long-term capital gains arising from the transfer of bonds referred to in clause ( a ) or, as the case may be, Global Depository Receipts referred to in clause ( b ), the income-tax payable shall be the aggregate of- ( i ) the amount of income-tax calculated on the income by way of interest or 7 [ dividends ] , as the case may be, in respect of bonds referred to in clause ( a ) or Global Depository Receipts referred to in clause ( b ), if any, included in the total income, at the rate of ten per cent; 8 [ (ii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (c), if any, included in the total income, (A) at the rate of ten per cent. for any transfer which takes place before the 23rd day of July, 2024; and (B) at the rate of twelve and one-half per cent. for any transfer which takes place on or after the 23rd day of July, 2024; and ] ( iii ) the amount of income-tax with which the non-resident would have been chargeable had his total income been reduced by the amount of income referred to in clauses ( a ), ( b ) and ( c ). (2) Where the gross total income of the non-resident- ( a ) consists only of income by way of interest or 7 [ dividends ] in respect of bonds referred to in clause ( a ) of sub-section (1) or, as the case may be, Global Depository Receipts referred to in clause ( b ) of that sub-section, no deduction shall be allowed to him under sections 28 to 44C or clause ( i ) or clause ( iii ) of section 57 or under Chapter VI-A; ( b ) includes any income referred to in clause ( a ) or clause ( b ) or clause ( c ) of sub-section (1), the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed as if the gross total income as so reduced, were the gross total income of the assessee. (3) Nothing contained in the first and second provisos to section 48 shall apply for the computation of long-term capital gains arising out of the transfer of long-term capital asset, being bonds or Global Depository Receipts referred to in clause ( c ) of sub-section (1). (4) It shall not be necessary for a non-resident to furnish under sub-section (1) of section 139 a return of his income if- ( a ) his total income in respect of which he is assessable under this Act during the previous year consisted only of income referred to in clauses ( a ) and ( b ) of sub-section (1); and ( b ) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income. (5) Where the assessee acquired Global Depository Receipts or bonds in an amalgamated or resulting company by virtue of his holding Global Depository Receipts or bonds in the amalgamating or demerged company, as the case may be, in accordance with the provisions of sub-section (1), the provisions of that sub-section shall apply to such Global Depository Receipts or bonds. Explanation.- For the purposes of this section,- ( a ) approved intermediary means an intermediary who is approved in accordance with such scheme as may be notified by the Central Government in the Official Gazette; ( b ) Global Depository Receipts shall have the same meaning as in clause ( a ) of the Explanation to section 115ACA. ] ---------------------------------- Notes :- 1. 55. Substituted by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to its substitution, section 115AC, as inserted by the Finance Act, 1992, w.e.f. 1-4-1993 and amended by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996, Finance Act, 1997, w.e.f. 1-4-1998 and Finance Act, 1999, w.e.f. 1-4-2000, read as under: 115AC. Tax on income from bonds or shares purchased in foreign currency or capital gains arising from their transfer.- (1) Where the total income of an assessee, being a non-resident, includes- (a) income by way of interest or dividends, other than dividends referred to in section 115-O, on bonds or shares of an Indian company issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf or on bonds or shares of a public sector company, sold by the Government and purchased by him in foreign currency; or (b) income by way of long-term capital gains arising from the transfer of bonds or, as the case may be, shares referred to in clause (a), the income-tax payable shall be the aggregate of- (i) the amount of income-tax calculated on the income by way of interest or dividends other than dividends referred to in section 115-O, as the case may be, in respect of bonds or shares referred to in clause (a), if any, included in the total income, at the rate of ten per cent; (ii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (b), if any, at the rate of ten per cent; and (iii) the amount of income-tax with which the non-resident would have been chargeable had his total income been reduced by the amount of income referred to in clause (a) and clause (b). (2) Where the gross total income of the non-resident- (a) consists only of income by way of interest or dividends other than dividends referred to in section 115-O in respect of bonds or, as the case may be, shares referred to in clause (a) of sub-section (1), no deduction shall be allowed to him under sections 28 to 44C or clause (i) or clause (iii) of section 57 or under Chapter VI-A; (b) includes any income referred to in clause (a) or clause (b) of sub-section (1) the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed as if the gross total income as so reduced, were the gross total income of the assessee. (3) Nothing contained in the first and second provisos to section 48 shall apply for the computation of long-term capital gains arising out of the transfer of long-term capital asset, being bonds or shares referred to in clause (b) of sub-section (1). (4) It shall not be necessary for a non-resident to furnish under sub-section (1) of section 139 a return of his income if- (a) his total income in respect of which he is assessable under this Act during the previous year consisted only of income referred to in clause (a) of sub-section (1); and (b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income. (5) Where the assessee acquired shares or bonds in an amalgamat ed or resulting company by virtue of his holding shares or bonds in the amalgamating or demerged company, as the case may be, in accordance with the provisions of sub-section (1), the provisions of the said sub-section shall apply to such shares or bonds. 2. Inserted by the Finance Act, 2003, w.e.f. 1-4-2004. Earlier the words , other than dividends referred to in section 115-O, were omitted by the Finance Act, 2002, w.e.f. 1-4-2003. 3. Inserted by the Finance Act, 2002, w.e.f. 1-4-2002. 4. Omitted, by the Finance Act, 2002, w.e.f. 1-4-2002.. Prior to its omission, clause (iv) read as under : (iv) issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, and purchased by him in foreign currency through an approved intermediary, against the shares of an Indian company arising out of disinvestment by such company in its subsidiary company, and the shares of both such Indian companies are listed in a recognised stock exchange in India; or 5. Inserted by the Finance Act, 2003, w.e.f. 1-4-2004. Earlier the words , other than dividends referred to in section 115-O were omitted by the Finance Act, 2002, w.e.f. 1-4-2003. 6. Inserted by the Finance Act, 2003, w.e.f. 1-4-2004. Earlier the words , other than dividends referred to in section 115-O were omitted by the Finance Act, 2002, w.e.f. 1-4-2003. 7. Substituted vide Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2021 before it was read as dividends , other than dividends referred to in section 115-O, 8. Substituted vide Section 34 of the Finance (No. 2) Act, 2024 dated 16-08-2024 w.e.f. 23-07-2024 before it was read as, ( ii ) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause ( c ), if any, at the rate of ten per cent; and