Provisions of Section115A(1)a & Provisions of Cahpter XII A i.e Sections 115C to I-NRI Individuals

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This discussion clarifies the tax treatment for Non-Resident Indians (NRIs) who opt out of special tax provisions (Sections 115C-115H) by choosing Section 115I. It addresses whether interest income from Indian Rupee bank and post office deposits falls under Section 115A(1)(a) or if opting out means taxation at standard slab rates. The consensus is that such interest is not covered by Section 115A(1)(a) and the NRI will be taxed at applicable slab rates.

rmalhotra

rmalhotra (Querist)

09 July 2022 Sir

NRI individual opts not to avail special scheme of provisions contained in Sections 115C to Sections 115H by not availing it under Section 115I and files of IT Return u/s 139(1) i.e with in due date.

He has interest income from Bank deposits & Post Office deposits. Deposits were made in Indian Rs. Under that situation following query arise.

1. Whether interest on deposits in Bank and Post office are covered in definition of ' Interest received from Govt or Indian concern on moneys borrowed by Govt or the Indian Concern in foreign currency , as given in Section 115A(1)(a) or not covered. ?
OR
2-- Section 115 A (1) (a) will not be attracted at all , since he has exercised option under section 115I to not to avail Scheme of sections 115C to Sections 115 H as provided in Chapter XIIA of Itax i,e Special Provisions relating to certain incomes of NRI. ?

3. Will he be taxed on interest income from Bank Deposits / Post Office interest @ 20% ?
OR
4. He will be taxed as per slab rates applicable to resident individuals becoz he exercised option under section 115 (I) by not availing special scheme available for NRI certain incomes. ?

5. Whether by not availing scheme from sections 115C to Section 115H does NRI compulsorily falls in Section 115AQ(1)(a) OR not.
Please clear this path on above points.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

10 July 2022 1 Not covered.
2 yes.
3 and 4 slab rates applicable.

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rmalhotra

rmalhotra (Querist)

11 July 2022 Thank you Sir. "Guru in need is Guru in Deed."
Sir you did not say on point 5. Can I draw inference that these two provisions are different set of situations. Section 115A(1)(a) refers to specified investments done in Foreign Currency and done with specific way. Whereas Section 115C to Section 115H is also specific investments done by individuals in Foreign Convertible currency only. But interest / accrued interest credited to NRI in his Indian Rs bank deposits / NRO deposits are not covered under both schemes once NRI opts Section 115 I in any assessment year while filing his ITR even if TDS is deducted u/s 195. Can you please be kind to guide if it is correct OR not correct.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 July 2022 Yes you are right.
It's not income from foreign currency investments.

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rmalhotra

rmalhotra (Querist)

11 July 2022 So Good and Thanks a lot Sir. !

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 July 2022 you are welcome..............

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