Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 210(1) of Income Tax Act 2025
(1) The income-tax payable on total income of an assessee, being a specified fund or Foreign Institutional Investor, which includes the income referred to in column B of the Table below, shall be the aggregate of the amounts mentioned in column C thereof.
Table
| Income | Income-tax payable |
|---|---|
| Securities other than units referred to in section 208. | (a) 20 % in case of Foreign Institutional Investor; (b) 10 % in case of specified fund. |
| Short-term capital gains (not being short-term capital gains referred to in section 196) arising from the transfer of such securities. | 30 % |
| Short-term capital gains referred to in section 196 arising from the transfer of such securities | 20 % |
| Long-term capital gains (not being long-term capital gains referred to in section 198 arising from the transfer of such securities | 12.5% |
| Long-term capital gains referred to in section 198 arising from the transfer of such securities which exceeds ₹ 1,25,000. | 12.5% |
| Total income as reduced by income referred to against serial numbers 1 to 5. | Income-tax chargeable on such income. |
Section 210(2) of Income Tax Act 2025
(2) In case of specified fund, provisions of this section shall apply only to the extent of income that is attributable to units held by non-resident (not being a permanent establishment of such non-resident in India) calculated in the manner as prescribed, irrespective of the provisions of sub-section (1).
Section 210(3) of Income Tax Act 2025
(3) Irrespective of anything contained in sub-section (1), where the specified fund––
(a) is investment division of an offshore banking unit as specified against serial number 1 of the Table in Schedule III.6; and
(b) fulfills the conditions referred to in clause (g)D(ii) of cell E1 of the Table in Schedule VI (Note 1),
the provisions of this section shall apply to the extent of income that is attributable to such investment division, calculated in the manner, as prescribed.
Section 210(4) of Income Tax Act 2025
(4) Where the gross total income of the specified fund or Foreign Institutional Investor—
(a) consists only of income in respect of securities referred in sub-section (1) (Table: Sl. No. 1), no deduction shall be allowed to it under sections 26 to 61 or section 93(1)(a) or (e) or under Chapter VIII;
(b) includes any income referred to in sub-section (1) (Table: Sl. No. 1) to (Table: Sl. No. 5),––
(i) the gross total income shall be reduced by the amount of such income; and
(ii) the deduction under Chapter VIII shall be allowed as if the gross total income as so reduced, were the gross total income of the specified fund or Foreign Institutional Investor.
Section 210(5) of Income Tax Act 2025
(5) The provisions of section 72(6) shall not apply for the computation of capital gains arising out of the transfer of securities referred to in sub-section (1) (Table: Sl. No. 2) to (Table: Sl. No. 5).
Section 210(6) of Income Tax Act 2025
(6) In this section,––
(a) “Foreign Institutional Investor” means an investor so specified in a notification by the Central Government;
(b) “permanent establishment” shall have the meaning assigned to it in section 173(c);
(c) “securities” shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956;
(d) “specified fund” shall have the meaning assigned to it in Schedule VI [Note 1]