Determination of tax in special casesCentral

Section 209 of Income Tax Act 2025 in hindi

(1)The income-tax payable, on the total income of an assessee, being a non- resident, which includes income specified in column B of the Table below, shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B.

TABLE

(a)bonds of an Indian company issued as per such scheme as may be notified by the Central Government; or
1. (b)bonds of a public sector company sold by the Government,and purchased in foreign currency.
2. (a)issued as per such scheme as may be notified by the Central Government against the initial issue of shares of an Indian company and purchased in foreign currency through an approved intermediary; or
3. (b)issued against the shares of a public sector company sold by the Government and purchased by him in foreign currency through an approved intermediary; or
4. (c)issued or re-issued as per a scheme as may be notified by the Central Government, against the existing shares of an Indian company purchased in foreign currency through an approved intermediary.
(2)Where the gross total income of the non-resident—
1. (a)consists only of income by way of interest or dividends in respect of—
2. (i)bonds referred to in sub-section (1) (Table: Sl. No. 1); or
3. (ii)Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 2),

no deduction shall be allowed under sections 28 to 58, 60 and 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. 3),—
1. (i)the gross total income shall be reduced by the such income; and
2. (ii)the deduction under Chapter VIII shall be allowed as if the gross total income so reduced, were the gross total income of the assessee.
(3)The provisions of section 72(6) shall not apply for computation of long-term capital gains arising out of the transfer of long-term capital asset being bonds or Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 3).
(4)It shall not be necessary for a non-resident to furnish a return of his income under section 263(1), if—
1. (a)his total income during the tax year consisted only of income referred to in sub-section (1) (Table: Sl. No. 1) and (Table: Sl. No. 2); and
2. (b)the tax deductible at source under the provisions of Chapter XIX-B has been deducted from such income.
(5)Where the assessee acquired Global Depository Receipts or bonds in an amalgamated or resulting company by virtue of his holding Global Depository Receipts or bonds in the amalgamating or demerged company, as the case may be, as per the provisions of sub-section (1), the provisions of that sub-section shall apply to such Global Depository Receipts or bonds.
(6)For the purposes of this section,—
1. (a)"approved intermediary" means an intermediary which is approved as per a scheme as may be notified by the Central Government; and
2. (b)"Global Depository Receipts" shall have the meaning assigned to it in section 193(4)(a).

Summary

Interest earned by non-residents from specified Indian company or public sector company bonds purchased in foreign currency is taxed at a flat rate of 10%.
Dividends received by non-residents from Global Depository Receipts (GDRs), which are certificates representing shares of a company held by an foreign bank, purchased in foreign currency through an approved intermediary are taxed at 10%.
Long-term capital gains, which are profits made from selling assets held for a long time, arising from transferring these specified bonds or GDRs are taxed at a flat rate of 12.5%.
If a non-resident's total income consists only of this interest or dividend income, no expense or tax deductions are allowed under sections 28 to 58, 60, 61, section 93(1)(a) or (e), or Chapter VIII.
If a non-resident has other income, their gross total income is reduced by these specified bond and GDR earnings before calculating Chapter VIII deductions for the remaining income.
If these specified bonds or GDRs are replaced with new ones in a merged or demerged company, the same tax concessions and rules apply to the new assets.

Practical examples

1John, a non-resident living in Chicago, purchased bonds of an Indian energy company in US dollars under a notified scheme. In the tax year 2026-27, he received 3,000 USD in interest. Under Section 209, this interest is taxed at a flat rate of 10%, and John cannot claim any standard or business deductions against it.

2Sarah, a resident of London, invested in Global Depository Receipts of an Indian bank through an approved foreign broker. On November 12, 2026, she received a dividend of 1,500 USD, which is taxed at 10%. On January 18, 2027, she sold the GDRs and made a long-term capital gain of 8,000 USD, which is taxed at a flat rate of 12.5%.

FAQ

1. What is the flat tax rate on specified bond interest for a non-resident?

The tax rate is flat 10% on interest from specified bonds of an Indian company or public sector company purchased in foreign currency.

2. Can I claim standard deductions if my only Indian income is from these GDR dividends?

No, if your gross total income consists only of specified interest or dividends, no deductions are allowed under sections 28 to 58, 60, 61, 93(1)(a) or (e), or under Chapter VIII.

3. What is the tax rate on long-term capital gains from selling these GDRs?

Long-term capital gains from transferring these bonds or GDRs are taxed at a flat rate of 12.5%.

4. How are Chapter VIII deductions handled if I have other Indian source income as well?

Your gross total income is reduced by the specified interest and dividend income first, and deductions under Chapter VIII are allowed only on the remaining reduced gross total income.

Test yourself

Q1.What is the tax rate on long-term capital gains arising from the transfer of specified bonds or GDRs under Section 209?

Q2.Which of the following deductions are allowed if a non-resident's total income consists only of interest and dividends covered under Section 209?

Q3.What is the tax rate on dividends received from specified GDRs purchased in foreign currency?

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Determination of tax in special casesCentral

Section 209 of Income Tax Act 2025 in hindi

(1)The income-tax payable, on the total income of an assessee, being a non- resident, which includes income specified in column B of the Table below, shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B.

TABLE

(a)bonds of an Indian company issued as per such scheme as may be notified by the Central Government; or
1. (b)bonds of a public sector company sold by the Government,and purchased in foreign currency.
2. (a)issued as per such scheme as may be notified by the Central Government against the initial issue of shares of an Indian company and purchased in foreign currency through an approved intermediary; or
3. (b)issued against the shares of a public sector company sold by the Government and purchased by him in foreign currency through an approved intermediary; or
4. (c)issued or re-issued as per a scheme as may be notified by the Central Government, against the existing shares of an Indian company purchased in foreign currency through an approved intermediary.
(2)Where the gross total income of the non-resident—
1. (a)consists only of income by way of interest or dividends in respect of—
2. (i)bonds referred to in sub-section (1) (Table: Sl. No. 1); or
3. (ii)Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 2),

no deduction shall be allowed under sections 28 to 58, 60 and 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. 3),—
1. (i)the gross total income shall be reduced by the such income; and
2. (ii)the deduction under Chapter VIII shall be allowed as if the gross total income so reduced, were the gross total income of the assessee.
(3)The provisions of section 72(6) shall not apply for computation of long-term capital gains arising out of the transfer of long-term capital asset being bonds or Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 3).
(4)It shall not be necessary for a non-resident to furnish a return of his income under section 263(1), if—
1. (a)his total income during the tax year consisted only of income referred to in sub-section (1) (Table: Sl. No. 1) and (Table: Sl. No. 2); and
2. (b)the tax deductible at source under the provisions of Chapter XIX-B has been deducted from such income.
(5)Where the assessee acquired Global Depository Receipts or bonds in an amalgamated or resulting company by virtue of his holding Global Depository Receipts or bonds in the amalgamating or demerged company, as the case may be, as per the provisions of sub-section (1), the provisions of that sub-section shall apply to such Global Depository Receipts or bonds.
(6)For the purposes of this section,—
1. (a)"approved intermediary" means an intermediary which is approved as per a scheme as may be notified by the Central Government; and
2. (b)"Global Depository Receipts" shall have the meaning assigned to it in section 193(4)(a).

Summary

Interest earned by non-residents from specified Indian company or public sector company bonds purchased in foreign currency is taxed at a flat rate of 10%.
Dividends received by non-residents from Global Depository Receipts (GDRs), which are certificates representing shares of a company held by an foreign bank, purchased in foreign currency through an approved intermediary are taxed at 10%.
Long-term capital gains, which are profits made from selling assets held for a long time, arising from transferring these specified bonds or GDRs are taxed at a flat rate of 12.5%.
If a non-resident's total income consists only of this interest or dividend income, no expense or tax deductions are allowed under sections 28 to 58, 60, 61, section 93(1)(a) or (e), or Chapter VIII.
If a non-resident has other income, their gross total income is reduced by these specified bond and GDR earnings before calculating Chapter VIII deductions for the remaining income.
If these specified bonds or GDRs are replaced with new ones in a merged or demerged company, the same tax concessions and rules apply to the new assets.