Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer.

1. (1) Where the total income of a Foreign Institutional Investor includes— 3[(a) 4[income other than income by way of dividends referred to in section 115-O] received in respect of securities (other than units referred to in section 115AB); or]
   • (b) income by way of short-term or long-term capital gains arising from the transfer of such securities, the income-tax payable shall be the aggregate of—
     • (i) the amount of income-tax calculated on the income in respect of securities referred to in clause (a), if any, included in the total income, at the rate of twenty per cent: 5[Provided that the amount of income-tax calculated on the income by way of interest referred to in section 194LD shall be at the rate of five per cent.;]
     • (ii) the amount of income-tax calculated on the income by way of short-term capital gains referred to in clause (b), if any, included in the total income, at the rate of thirty per cent: 6[Provided that the amount of income-tax calculated on the income by way of short-term capital gains referred to in section 111A shall be at the rate of 7[fifteen per cent.];]
     • (iii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (b), if any, included in the total income, at the rate of ten per cent.; 1*** 2[Provided that in case of income arising from the transfer of a long-term capital asset referred to in section 112A, income-tax at the rate of ten per cent. shall be calculated on such income exceeding one lakh rupees; and]
     • (iv) the amount of income-tax with which the Foreign Institutional Investor would have been chargeable had its total income been reduced by the amount of income referred to in clause (a) and clause (b).
2. (2) Where the gross total income of the Foreign Institutional Investor(a) consists only of income in respect of securities referred to in clause (a) of sub-section (1), no deduction shall be allowed to it under sections 28 to 44C or clause (i) or clause (iii) of section 57 or under Chapter VIA;
   • (b) includes any income referred to in clause (a) or clause (b) of sub-section (1), the gross total income shall be reduced by the amount of such income and the deduction under Chapter VIA shall be allowed as if the gross total income as so reduced, were the gross total income of the Foreign Institutional Investor.
3. (3) Nothing contained in the first and second provisos to section 48 shall apply for the computation of capital gains arising out of the transfer of securities referred to in clause (b) of sub-section (1). Explanation.—For the purposes of this section,—
   • (a) the expression “Foreign Institutional Investor” means such investor as the Central Government may, by notification in the Official Gazette, specify in this behalf;
   • (b) the expression “securities” shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).] 115B. Tax on profits and gains of life insurance business.—3[(1)] Where the total income of an assessee includes any profits and gains from life insurance business, the income-tax payable shall be the aggregate of—
     • (i) the amount of income-tax calculated on the amount of profits and gains of the life insurance business included in the total income, at the rate of twelve and one-half per cent; and
     • (ii) the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of profits and gains of the life insurance business. 4[(2) Notwithstanding anything contained in sub-section (1) or in any other law for the time being in force or any instrument having the force of law, the assessee shall, in addition to the payment of incometax computed under sub-section (1), deposit, during 5[the previous years relevant to the assessment years commencing on the 1st day of April, 1989 and the 1st day of April, 1990], an amount equal to thirty-three and one-third per cent of the amount of income-tax computed under clause (i) of sub-section (1), in such social security fund (hereafter in this sub-section referred to as the security fund), as the Central Government may, by notification in the Official Gazette, specify in this behalf: 1. The word “and” omitted by Act 13 of 2018, s. 34 (w.e.f. 1-4-2019). 3. Section 115B renumbered as sub-section (1) by Act 26 of 1988, s. 31 (w.e.f. 1-4-1989). Provided that where the assessee makes during the said 1[previous years] any deposit of an amount of not less than two and one-half per cent of the profits and gains of the life insurance business in the security fund, the amount of income-tax payable by the assessee under the said clause (i) shall be reduced by an amount equal to two and one-half per cent of such profits and gains and, accordingly, the deposit of thirty-three and one-third per cent required to be made under this sub-section shall be calculated on the income-tax as so reduced].]

¹ Subs. by Act 20 of 2015, s. 29, for “issued to non-resident inventors against the issue of ordinary shares or foreign currency convertible bonds of issuing company” (w.e.f. 1-4-2016).

² Ins. by Act 38 of 1993, s. 21 (w.e.f. 1-4-1993).

³ Subs. by Act 21 of 1998, s. 38, for clasue (a) (w.e.f. 1-4-1999). 4. Subs. by Act 32 of 2003, s. 53, for “income” (w.e.f. 1-4-2004).

⁵ Ins. by Act 17 of 2013, s. 28 (w.e.f. 1-4-2014). 6. Ins. by Act 23 of 2004, s. 27 (w.e.f. 1-4-2005). 7. Subs. by Act 18 of 2008, s. 22, for “ten per cent.” (w.e.f. 1-4-2009).

² Ins. by s. 34, ibid. (w.e.f. 1-4-2019).

⁴ Ins. by s. 31, ibid. (w.e.f. 1-4-1989).

⁵ Subs. by Act 13 of 1989, s. 18, for “the previous year relevant to the assessment year commencing on the 1st day of April, 1989” (w.e.f. 1-4-1990).