What the special provisions are.
These rules, long known as Chapter XII-A or sections 115C to 115I, have been carried into the Income-tax Act, 2025. They give non-resident Indians a simpler, flat-rate regime for income from certain Indian assets bought with foreign currency.
They are optional. You can use them, or have the normal rules apply. Since equity gains and dividends are now taxed at similar rates under the normal rules, they matter most for interest-bearing assets, the reinvestment exemption and the no-return rule.
An individual who is a non-resident and is either an Indian citizen or a person of Indian origin. Companies, HUFs and foreign nationals without Indian origin cannot use them.
Which assets qualify.
The provisions apply only to foreign exchange assets: specified assets bought, or subscribed to, with convertible foreign exchange, for example money remitted from the UK or paid from an NRE or FCNR account.
Shares of an Indian company
Private or public company shares bought with foreign exchange.
Debentures of a public company
Issued by an Indian company that is not a private company.
Deposits with a public company
Deposits with an Indian company that is not a private company.
Central Government securities
And any other asset the government notifies.
Indian property, and interest on bank deposits, fall outside these rules and are taxed under the normal provisions.
How income is taxed under them.
| Item | Special provisions | Normal rules for NRIs |
|---|---|---|
| Interest and dividends from foreign exchange assets | 20% flat | Slab rates for interest; 20% TDS on dividends |
| Long-term gains on foreign exchange assets | 12.5% | 12.5% for most long-term gains |
| Deductions and expenses against this income | Not allowed | Allowed where the law permits |
| Basic exemption limit against this income | Not available | Available against slab-rate income |
| Exemption if gains are reinvested | Yes, within 6 months | Only through the usual reinvestment exemptions |
| Return needed if TDS deducted in full | No | Yes, if income is above the limit |
Surcharge and cess are added to these rates. The 12.5% rate on long-term gains has applied since 23 July 2024, when it replaced 10%.
The reinvestment exemption.
Long-term gains on a foreign exchange asset are exempt if the net sale amount is reinvested within six months in another specified asset or certain savings certificates. If only part of the amount is reinvested, the exemption is proportionate.
If the new asset is sold or converted into money within three years, the exempt gain becomes taxable in that year.
What happens when you become resident.
- Option to continueOn becoming resident, you can choose to keep the special rules for investment income from foreign exchange assets other than shares.
- How to chooseBy a written declaration with your return for the year you become resident.
- How long it lastsUntil the asset is sold or converted into money.
- Opting out completelyIn any year, you can choose for the special rules not to apply, by declaring this in your return.
This is useful if you are planning a move back from the UK. See Returning Indian.
When the provisions help, and when not.
High earners holding company deposits or debentures bought from abroad, who would otherwise pay 30% on the interest.
NRIs selling shares at a gain who plan to reinvest in India within six months.
Small investors whose income would be under the exemption limit, as no basic exemption is allowed against this income.
How we apply the special provisions.
Confirm you qualify
Your citizenship or Indian origin and your residential status for the year.
Trace the source of money
Bank records showing the assets were bought with foreign exchange.
Run both calculations
Tax under the special provisions and under the normal rules.
Make and record the choice
The right schedule and declarations in your return, or no return where none is needed.
Why NRIs in the UK choose us for India tax.
We work with the India side of your tax while keeping your UK Self Assessment and treaty position in view.
Every computation is checked by a second Chartered Accountant before anything is filed.
A written scope and fee before work starts, with no surprise charges later.
Encrypted document sharing and e-verification, so nothing needs a trip to India.
Returns, TDS refunds, FEMA questions and property sales handled by the same team.
Clear explanations of what you owe, why, and what to keep for next year.
Special provisions advice for NRIs across the UK.
We advise Indian citizens and persons of Indian origin living throughout the UK on investing in India with money from abroad, and on whether the special provisions reduce their Indian tax.
London
South East
Midlands
North of England
East and South West
Scotland, Wales, NI
Special provisions for NRIs FAQs.
Invested in India with money from the UK?
Tell us what you hold and how it was funded. We will compare the special and normal rules for you.
This page is general guidance based on Indian income-tax and FEMA rules as they stand, including the Income-tax Act, 2025 that applies from 1 April 2026. It is not legal or financial advice for your situation. Rates, limits and deadlines can change, so please speak to us before acting on it.