Tax rebate for nri
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
31 March 2012
If Nri is filing tax return, can rebate be claimed on tax computed/deducted as Section 115I states
" A non-resident Indian may elect not to be governed by the provisions of this Chapter for any assessment year by furnishing his return of income and his total income for that assessment year shall be computed and tax on such total income shall be charged in accordance with the other provisions of this Act."
" A non-resident Indian may elect not to be governed by the provisions of this Chapter for any assessment year by furnishing his return of income and his total income for that assessment year shall be computed and tax on such total income shall be charged in accordance with the other provisions of this Act."
31 March 2012
SECTION 115-I IS APPLICABLE ONLY IN RESPECT OF CERTAIN SPECIFIED INCOMES OF NRI DERIVED FROM INVESTMENT IN CERTAIN SPECIFIED ASSETS
CA MANOJ GUPTA
JODHPUR
09828510543
CA MANOJ GUPTA
JODHPUR
09828510543
Querist : Anonymous
Querist :
Anonymous
(Querist)
01 April 2012
Thank you Sir for your advice.
What I understand:
an NRI has either of the following options:
1.Special provisions apply for himself, in which case he will be charged @ 20% on investment income, 10% on long term capital gain and if there is any other income then those are chargeable as per Section 2, First schedule.
Only confusion over here is whether exemption limit applies or not and again on total income or on income after investment income and capital gains.
In this case, I believe,there will be no deductions, nor rebate will be eligible.
2.General provisions
1.If assessee file return u/s 139(1) then his entire income can be assessed based on the general provisions of the act which will also make him eligible for deductions and rebate
3 Is there any case which justifies the use of option 1 over option 2.
Any advice on the above will be valuable.
Thanks
What I understand:
an NRI has either of the following options:
1.Special provisions apply for himself, in which case he will be charged @ 20% on investment income, 10% on long term capital gain and if there is any other income then those are chargeable as per Section 2, First schedule.
Only confusion over here is whether exemption limit applies or not and again on total income or on income after investment income and capital gains.
In this case, I believe,there will be no deductions, nor rebate will be eligible.
2.General provisions
1.If assessee file return u/s 139(1) then his entire income can be assessed based on the general provisions of the act which will also make him eligible for deductions and rebate
3 Is there any case which justifies the use of option 1 over option 2.
Any advice on the above will be valuable.
Thanks
26 July 2025
Great question! Here’s a detailed explanation regarding tax rebate and filing options for an NRI under Section 115I:
---
### Background:
Section 115-I provides **NRI taxpayers** an option to either:
1. **Opt for special provisions** — where their income is taxed at specific concessional rates (20% on investment income, 10% on long-term capital gains, etc.), **without exemptions/deductions/rebate**.
2. **Opt out of these special provisions by filing a regular income tax return under Section 139(1)** — where they are assessed under the **general provisions** of the Income Tax Act, making them eligible for deductions, exemptions, and rebates.
---
### Your observations are correct. Let me clarify further:
| **Option** | **Tax Treatment** | **Exemptions/Deductions/Rebate** | **Applicability** |
| -------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------------------------------------------------- | -------------------------------------------------------------------------- |
| 1. Special Provisions (Section 115I) | Taxed @ concessional rates (20% investment income, 10% LTCG) | No deductions/exemptions/rebate allowed | NRI can choose this option by *not* filing return or opting out explicitly |
| 2. General Provisions (File Return under Section 139(1)) | Taxed as per slab rates applicable to residents | Eligible for all deductions (80C, 80D etc.), rebates (like Section 87A), exemptions | NRI must file return and opt out of special provisions |
---
### Important points:
* If the NRI **opts for special provisions** under Section 115I, **no basic exemption limit or rebate** under Section 87A will apply. Income is taxed at flat concessional rates as prescribed.
* If the NRI **opts out of Section 115I** by filing return under normal provisions, **the entire income is assessed normally**, allowing deductions and rebates (if applicable).
* Usually, **if the total income is low enough to avail rebate or exemption under normal provisions, then filing return under normal provisions is beneficial**.
* Section 115I is beneficial when the NRI has mainly investment income and the concessional tax rates provide a tax advantage despite no deductions.
---
### Practical advice:
* NRIs with **simple income sources and lower income may prefer the normal provisions** to avail exemptions/rebates.
* NRIs with **mainly investment income or LTCG and high income may prefer special provisions** for concessional rates despite losing deductions.
* Each case should be analyzed individually.
---
### No landmark case specifically justifies option 1 over option 2, but tax planning depends on the nature and amount of income.
---
If you want, I can help prepare a comparison table or example to show the tax impact under both options. Would that help?
---
### Background:
Section 115-I provides **NRI taxpayers** an option to either:
1. **Opt for special provisions** — where their income is taxed at specific concessional rates (20% on investment income, 10% on long-term capital gains, etc.), **without exemptions/deductions/rebate**.
2. **Opt out of these special provisions by filing a regular income tax return under Section 139(1)** — where they are assessed under the **general provisions** of the Income Tax Act, making them eligible for deductions, exemptions, and rebates.
---
### Your observations are correct. Let me clarify further:
| **Option** | **Tax Treatment** | **Exemptions/Deductions/Rebate** | **Applicability** |
| -------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------------------------------------------------- | -------------------------------------------------------------------------- |
| 1. Special Provisions (Section 115I) | Taxed @ concessional rates (20% investment income, 10% LTCG) | No deductions/exemptions/rebate allowed | NRI can choose this option by *not* filing return or opting out explicitly |
| 2. General Provisions (File Return under Section 139(1)) | Taxed as per slab rates applicable to residents | Eligible for all deductions (80C, 80D etc.), rebates (like Section 87A), exemptions | NRI must file return and opt out of special provisions |
---
### Important points:
* If the NRI **opts for special provisions** under Section 115I, **no basic exemption limit or rebate** under Section 87A will apply. Income is taxed at flat concessional rates as prescribed.
* If the NRI **opts out of Section 115I** by filing return under normal provisions, **the entire income is assessed normally**, allowing deductions and rebates (if applicable).
* Usually, **if the total income is low enough to avail rebate or exemption under normal provisions, then filing return under normal provisions is beneficial**.
* Section 115I is beneficial when the NRI has mainly investment income and the concessional tax rates provide a tax advantage despite no deductions.
---
### Practical advice:
* NRIs with **simple income sources and lower income may prefer the normal provisions** to avail exemptions/rebates.
* NRIs with **mainly investment income or LTCG and high income may prefer special provisions** for concessional rates despite losing deductions.
* Each case should be analyzed individually.
---
### No landmark case specifically justifies option 1 over option 2, but tax planning depends on the nature and amount of income.
---
If you want, I can help prepare a comparison table or example to show the tax impact under both options. Would that help?
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