Exempt Income of Non-Residents - International Taxation - Income Tax

Exempt Income of Non-Residents Section Particulars Limit of Exemption 10(4)(ii) Interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India Fully Exempt 10(4B) Any income from interest on such savings certificates as notified before 1.6.2002 in case of citizen of India or a person of Indian origin Fully Exempt 10(4C) Any income by way of interest payable to a non-resident, not being a company, or to a foreign company, by any Indian company or business trust in respect of monies borrowed from a source outside India by way of issue of rupee denominated bond, as referred to in section 194LC(2)(ia) , during the period beginning from the 17th day of September, 2018 and ending on the 31st day of March, 2019. Fully exempt 10(4D) Any income accrued or arisen to, or received by a specified fund as a result of transfer of capital asset referred to in section 47(viiab), on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in convertible foreign exchange, to the extent such income accrued or arisen to, or is received in respect of units held by a non-resident. Fully Exempt Such income exempt to the extent attributable to unit held by NR (not being the PE of a NR in India) or is attributable to the investment division of offshore banking unit ( OBU added by FA 2021, w.e.f. AY 2022-23) Note:- Investment division of Offshore Banking Unit (OBU) means an investment division of a banking unit of a NR located in an IFSC, as referred in section 80LA(1A) and which has commenced its operation on or before the 31 st March, 2024. Specified Fund means,- Fund established or incorporated in India in the form of a trust or a company or LLP or a body corporate, - Which has been granted a certificate of registration as a Category III Alternative Investment Fund and is regulated under the SEBI (AIF) Regulations 2012, made under SEBI Act, 1992 or IFSC Authority Act, 2019; Which is located in any International Financial Services Centre; and of which all the units other than unit held by a sponsor or manager are held by non-residents: Provided that the condition specified in this item shall not apply where any unit holder or holders, being non-resident during the previous year when such unit or units were issued, becomes resident under section 6(1) or 6(1A) in any previous year subsequent to that year, if the aggregate value and number of the units held by such resident unit holder or holders do not exceed 5% of the total units issued and fulfil such other conditions is specified under Rule 21AIA are follow:- The unit holder, who becomes a resident during any subsequent PY, shall cease to be a unit holder of such specified fund within a period of 3 months from the end of the PY in which he becomes a resident. Rule 21AIA(1)(a) . [ Rule 21AIA(1) ] The specified fund shall maintain the following documents in respect of its unit holders as specified under Rule 21AIA(1)(b) . [ Rule 21AIA(1) ] The specified fund shall certify that it has fulfilled the conditions specified under rule 21AIA(1) and furnish information in respect of units held by residents in the annual statement of exempt income in Form No. 10-IG . [ Rule 21AIA(2) ] The income attributable to units held by non-resident (not being the permanent establishment of a nonresident in India) in a specified fund shall not be exempt under clause (4D) of section 10 unless the specified fund complies with rule 21AIA(2). [ Rule 21AIA(3) ] investment division of an offshore banking unit, which has been granted a certificate of registration as a Category-I foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 and which has commenced its operations on or before the 31st day of March, 2024; and fulfils such conditions including maintenance of separate accounts for its investment division, as may be prescribed 10(4E) Any income accrued or arisen to, or received by, a non-resident as a result of transfer of non-deliverable forward contracts or offshore derivative instruments or over the counter derivatives; or distribution of income on offshore derivative instruments, entered into with an offshore banking unit of an IFSC as referred to in section 80LA(1A) , which fulfills prescribed conditions Fully Exempt Note:- As per rule 21AK specifies the following conditions to be fulfilled for claiming such exemption the non-deliverable forward contract or offshore derivative instrument or over-the-counter derivative is entered into by the non-resident with an offshore banking unit of an IFSC which holds a valid certificate of registration granted under IFSC Authority (Banking) Regulations, 2020 by the IFSC Authority; and such contract, instrument or derivative is not entered into by the non-resident through or on behalf of its permanent establishment in India. Meaning of certain terms A non-deliverables forward contract shall mean contract for the difference between an exchange rate agreed before and the actual spot rate at maturity, with the spot rate being taken as domestic rate or a market determined rate and such contract being settled with a single payment in a foreign currency. Offshore derivative instrument shall have the same meaning assigned to it in SEBI Foreign Investors Regulations, 2019. Over the counter derivatives shall mean a derivative contract that is not traded on an exchange but instead is privately negotiated between a purchaser and a seller. 10(4F) Any income of a non-resident by way of royalty or interest, on account of lease of an aircraft or a ship in a previous year, paid by a unit of an International Financial Services Centre as referred to in section 80LA(1A) , if the unit has commenced its operations on or before the 31st day of March, 2024. Fully Exempt 10(4G) any income received by a non-resident from, portfolio of securities or financial products or funds, managed or administered by any portfolio manager on behalf of such non-resident; or such activity carried out by such person, as may be notified by the Central Government in the Official Gazette, in an account maintained with an Offshore Banking Unit in any International Financial Services Centre, as referred to in section 80LA(1A) , to the extent such income accrues or arises outside India and is not deemed to accrue or arise in India. Fully Exempt Explanation - (i) capital market intermediary shall have the meaning as assigned to it in clause (ga) of regulation 2(1) of the International Financial Services Centres Authority (Capital Market Intermediaries) Regulations, 2021; (ii) financial product shall have the meaning as assigned to it in sub-clause (d) of section 3(1) of International Financial Services Centres Authority Act, 2019 ; (iii) International Financial Services Centre shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 ; (iv) Unit shall have the same meaning as assigned to it in clause (zc) of section 2 of the Special Economic Zones Act, 2005 . [ Inserted by Notification No. 04/2024 dated 01.04.2024 ] 10(6)(ii) Remuneration received by Foreign Diplomat/Consulate and their staff (Subject to conditions) Fully Exempt 10(6)(vi) Employees of foreign enterprises for services rendered by him during his stay in India, If where such enterprises is not engaged in any business and his stay is not exceeding 90 days in India and employers is not claiming any deduction for such amount Fully exempt 10(6)(viii) Salary received for employment on a Foreign Ship stay should not exceed 90 days Fully Exempt Individual Non-resident Salaried Employee (Not being a citizen of India) 10(6)(xi) Salary received by employee of a foreign Govt. deputed in India - in connection with his training in any establishment or office of, or in any undertaking as specified Fully exempt Individual Salaried Employee (Not being a citizen of India) 10(6BB) Tax paid under an agreement between 1.4.1997 to 31.3.1999 and after 31.3.2007 of acquiring an aircraft or an aircraft engine (other than payment for providing spares, facilities or services in connection with the operation of leased aircraft) on lease Fully Exempt Government of foreign state or foreign enterprises 10(6C) Royalty Income or fees for technical services under an agreement with CG of specified foreign companies related to projects connected with security of India Fully Exempt Foreign Company (notified by CG) 10(6D) Income arising to a NR other than a company or a foreign company by way of royalty from or fees for technical services rendered in or outside India to the National Technical Research Organisation Fully Exempt 10(8) An individual who is assigned to duties in India in connection with any co-operative technical assistance programmes and projects Full Exempt 10(8A) Any remuneration or fee received by consultant, out of the funds made available to an international organization under a technical assistance grant agreement Fully Exempt Consultant, being- An Individual: Not being an Indian citizen; or Being an Indian Citizen who is not ordinarily resident in India, or Any other person being a non-resident. Engaged by the agency for rendering technical services in India in connection with any technical assistance programme or project in accordance with the approved agreement. 10(8B) Sub-consultant of consultant u/s 10(8A) Fully Exempt Employee of a consultant, being an Individual: Not being an Indian Citizen; or Being an Indian Citizen who is not ordinarily resident in India. Contract of service must be approved by the prescribed authority before commencement of service. 10(9) Income of any member of the family of any such individual as is referred u/s 10(8), 10(8A) 10(8B) Fully Exempt Foreign Income referred in Section 10(8)/(8A)/(8B)/(9) above refers to The other income accruing or arising outside India. Such Income would be exempt provided: It is not deemed to accrue or arise in India; and The individual is required to pay any income tax or social security tax of such income to the Government of that Foreign State or Country of origin of such number. 10(15(iiia) Interest on deposits made by a foreign bank with a scheduled bank with approval of RBI Fully Exempt Bank Incorporated outside India and authorised to perform central banking functions in that country. 10(15)(iv)(fa) Interest payable by a scheduled bank to a non-resident on deposits in foreign currency where the acceptance of such deposits by the bank is approved by the RBI Fully Exempt - Non-resident Individual or HUF being a resident but not ordinary resident 10(15)(viii) Interest on deposit on or after 01.04.2005 in an Offshore banking unit 10(15)(ix) Interest payable by unit located in an IFSC in respect of monies borrowed by it on or after 01.09.2019 Fully Exempt- Non-resident 10(15A) Lease rental paid by Indian company engaged in the business of operation of aircraft, to acquire an aircraft or an aircraft engine (other than a payment for providing spares, facilities or services in connection with the operation of leased aircraft) under an approved (by CG) agreement not entered into between 01.4.1997 and 31.03.1999, or after 31.03.2007 Fully exempt - Government of a foreign State or a foreign enterprise. 10(48) Any income received in India in Indian currency by a foreign company on account of sale of crude oil, any other goods or rendering of services in India as notified Foreign Company Fully Exempt 10(48A) Any income accruing or arising on account of storage of crude oil in a facility in India and sale of crude oil therefrom in India Foreign Company Fully Exempt 10(48B) Any income on leftover stock of cured oil (as referred in 10(48A) above) Foreign Company Fully Exempt