Section 214 — Tax on investment income and long-term capital gains. Successor to s.115E of the 1961 Act.
Section 214 is in Chapter XIII — Determination of Tax in Special Cases, which runs from section 190 to section 235.
The section rates the total income of a non-resident Indian through a three-row Table. Income from investment is taxed at 20%; income from long-term capital gains on a specified asset at 12.5%; and the total income as reduced by those two categories at the rates in force. The tax payable is the aggregate of the three computations. The section defines neither "income from investment" nor "specified asset" — it applies rates to categories described elsewhere in the Part.
It gives a non-resident Indian a flat, self-contained rate on investment income and on long-term gains from specified assets rather than putting that income through the ordinary rate structure, while leaving everything else at the rates in force.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Rate on income from investment | 20% | Applied only to the income falling in row 1 of the Table, not to the whole total income | 214, Table Sl. No. 1 |
| Rate on long-term capital gains | 12.5% | Only long-term capital gains, and only on a specified asset | 214, Table Sl. No. 2 |
| Rate on the remaining income | Rates in force | Total income as reduced by the row 1 and row 2 income | 214, Table Sl. No. 3 |
Compute the liability row by row rather than applying a single rate to total income: 20% on investment income, 12.5% on long-term gains from specified assets, and the ordinary rates in force on whatever is left. Because row 2 is confined to long-term gains on a specified asset, a short-term gain, or a long-term gain on an asset that is not a specified asset, drops into row 3 and is taxed at the rates in force. The section carries no deduction rules and no definitions, so the meaning of investment income and of a specified asset has to come from the other provisions of this Part.
A non-resident Indian has Rs. 20 lakh of income from investment, Rs. 15 lakh of long-term capital gains on a specified asset and Rs. 6 lakh of other income. The tax is the aggregate of three separate computations, not one rate on Rs. 41 lakh: 20% on the Rs. 20 lakh, that is Rs. 4 lakh; 12.5% on the Rs. 15 lakh, that is Rs. 1,87,500; and the rates in force applied to the remaining Rs. 6 lakh under row 3. The bite is in how narrow row 2 is — had the Rs. 15 lakh been a short-term gain, or a long-term gain on an asset that is not a specified asset, it would fall out of row 2 altogether and into row 3 at the rates in force.
In the tax computation of a non-resident Indian's return and in the intimation or assessment that applies the Table. The section itself supplies rates only, so what counts as income from investment or a specified asset has to be settled from the other provisions of this Part before the rows can be filled in.
Income from investment. 20%
See the full 1961 to 2025 concordance.
