Tax on income of Foreign Institutional Investor (FII) – Section 115AD - International Taxation - Income Tax

Tax on income of Foreign Institutional Investor (FII) Section 115AD Income received by Foreign Institutional Investor (FII) or specified fund on securities (other than units of UTI/MF) The income tax on the total income shall be chargeable as under: - Nature of income Rate of tax (i) Interest/Dividend received from FII 20% Specified Fund 10% (ii) Short-Term Capital Gains 30% (iii) Short-Term Capital Gains u/s 111A 15% [ Upto 22.07.2024 ] 20% [ From 23.07.2024 Amended vide Finance (No. 2) Act, 2024 ] (iv) Long-Term Capital Gains, 10% [ Upto 22.07.2024 ] 12.5% [ From 23.07.2024 Amended vide Finance (No. 2) Act, 2024 ] Notes: Long term capital gain from sale of equity shares referred to in Section 112A , Income Tax @ 10% on income exceeding ₹1 lakh aggregate amount during the financial year ₹ 1,25,000/- [ w.e.f. 23.07.2024 substituted vide Finance (No. 2) Act, 2024 ] . Higher Surcharge @25% and 37% not applicable in case of above dividend Capital Gain (STCG LTCG). It means maximum surcharge rate on dividend above capital gain is 15% in case of AOP/BOI. where the total income of a person, being a specified fund referred to in in section 10(4D) of the Income-tax Act, includes any income under section 115AD(1)(a) of the Income-tax Act, the income-tax calculated on that part of income shall not be increased by any surcharge. [ Inserted vide Finance (No.2) Act, 2024 ] In case of specified fund, the provisions of this section shall apply only to the extent of income that is attributable to units held by NR (not being a permanent establishment of a non-resident in India) calculated in the prescribed manner. [w.e.f. AY 2021-22] Specified Fund meaning same as assign in section 10(4D) Where the specified fund is investment division of an Offshore Banking Unit, the provisions of this section shall apply only to the extent of income that is attributable to the investment division of such OBU, referred to in Section 10(4D) , as a Category-I portfolio investor under the SEBI (FPI) Regulations, 2019, Calculated in such manner as prescribed. [w.e.f. AY 2022-23] Where the GTI of the assessee includes income in respect of securities mentioned above neither deduction u/s 28 to 44C nor u/s 57(i) or (iii), nor under chapter VI-A shall be allowed from such income. Further, no deduction under chapter VI-A shall be allowed from such short-term or Long-Term Capital Gain. For computing capital gains on the transfer of securities, both the proviso of section 48 shall not be applicable. Mandatory to file Return of Income even if TDS has been deducted. Set Off, C/F Set Off of Losses (C/Y and B/F) against the income referred to in section: Possible subject to the provision of chapter VI . Unabsorbed depreciation shall not be allowed to be set off against the income referred u/s 115A. On other income normal provisions and normal tax rates shall apply. There is no exemption on filing of return of income.