My NRI client's only Indian income for the year was interest on debentures of an Indian public company subscribed to in foreign exchange, and the company deducted tax at source. He did not file a return and has now had a notice. Was he obliged to file?
If both conditions in section 115G are satisfied, no. It is not necessary for a non-resident Indian to furnish a return under section 139(1) if his total income assessable under the Act during the previous year consisted ONLY of investment income or long-term capital gains or both, AND the tax deductible at source under Chapter XVII-B has been deducted from that income.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 1983-06-01, reported as Income-tax Act, 1961, s.115G, as inserted with Chapter XII-A by the Finance Act 1983 with effect from 1 June 1983. It bears on section 115G, section 115C, section 115D, section 115E, section 115H, section 139, section 139(1), section 271(1)(c) of the Income Tax Act 1961, in Residence & Treaty Benefit, TDS Defaults, Assessment & Scrutiny and Refunds, Interest & Condonation matters.
This is relief people do not know they have, and it is also relief that is easy to lose. The two conditions are cumulative and both are strict. 'Consisted only of' means exactly that: a single item of other Indian income — rent from a flat, a savings bank interest credit, a small dividend from an asset not acquired in convertible foreign exchange — takes the year outside the section and revives the ordinary section 139(1) obligation for the whole year. And it is the tax DEDUCTIBLE under Chapter XVII-B that must have been deducted, so a short deduction, or a deduction the payer never made, defeats the section however innocent the assessee. Two limits deserve to be stated plainly. First, s.115G excuses the FURNISHING of a return under s.139(1); it does not extinguish the charge, and it does not by itself answer a notice under s.142(1) or s.148 calling for a return. Second, the relief is worth nothing where the client wants a refund of excess deduction or wants to claim a treaty rate — a return is the only route to either, and filing voluntarily is usually the better course. Where the client also wants the benefit of the chapter to continue after he becomes resident, note that s.115H requires a declaration to be furnished ALONG WITH the return under s.139, so an assessee who relies on s.115G and files nothing has no return to attach the declaration to. One decision shows the section doing real work. In Rita Hemchand Gandhi v. ITO (International Taxation), Mumbai (ITAT Mumbai, order pronounced 21 June 2024), a non-resident whose only income was interest, on which the payer had deducted at ten per cent instead of the twelve and one-half per cent treaty rate, filed no return in reliance on section 115G; when the shortfall was detected on reopening she paid the balance immediately and the assessment was made at the returned figure. The Tribunal deleted the section 271(1)(c) penalty, holding that the error was the deductor's and not the assessee's. The case is an answer to a penalty rather than to the charge, and that is how it should be pleaded.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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As printed on the Year 2026 departmental page under the heading 'Return of income not to be filed in certain cases', section 115G reads: '115G. It shall not be necessary for a non-resident Indian to furnish under sub-section (1) of section 139 a return of his income if— (a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of long-term capital gains or both; and (b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.' The archived Year 2000 page prints the identical words under the identical heading.
A non-resident Indian need not furnish a return of income under section 139(1) where two conditions are both satisfied: his total income assessable under the Act during the previous year consisted only of investment income or income by way of long-term capital gains or both, and the tax deductible at source under Chapter XVII-B has been deducted from that income. The conditions are cumulative and the section addresses only the obligation to furnish a return under section 139(1).
Not applicable — this is a statement of statutory text. No judicial reasoning is involved, and no decision construing the section against a competing construction was located this pass, though section 115G was applied by the ITAT Mumbai in Rita Hemchand Gandhi v. ITO (International Taxation) (order pronounced 21 June 2024).
It shall not be necessary for a non-resident Indian to furnish under sub-section (1) of section 139 a return of his income if— (a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of long-term capital gains or both; and (b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.
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Handle my notice → Ask a CA on WhatsAppIf both conditions in section 115G are satisfied, no. It is not necessary for a non-resident Indian to furnish a return under section 139(1) if his total income assessable under the Act during the previous year consisted ONLY of investment income or long-term capital gains or both, AND the tax deductible at source under Chapter XVII-B has been deducted from that income. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 115G, section 115C, section 115D, section 115E, section 115H, section 139, section 139(1), section 271(1)(c) of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.115G, as inserted with Chapter XII-A by the Finance Act 1983 with effect from 1 June 1983. This is relief people do not know they have, and it is also relief that is easy to lose. The two conditions are cumulative and both are strict. 'Consisted only of' means exactly that: a single item of other Indian income — rent from a flat, a savings bank interest credit, a small dividend from an asset not acquired in convertible foreign exchange — takes the year outside the section and revives the ordinary section 139(1) obligation for the whole year. And it is the tax DEDUCTIBLE under Chapter XVII-B that must have been deducted, so a short deduction, or a deduction the payer never made, defeats the section however innocent the assessee. Two limits deserve to be stated plainly. First, s.115G excuses the FURNISHING of a return under s.139(1); it does not extinguish the charge, and it does not by itself answer a notice under s.142(1) or s.148 calling for a return. Second, the relief is worth nothing where the client wants a refund of excess deduction or wants to claim a treaty rate — a return is the only route to either, and filing voluntarily is usually the better course. Where the client also wants the benefit of the chapter to continue after he becomes resident, note that s.115H requires a declaration to be furnished ALONG WITH the return under s.139, so an assessee who relies on s.115G and files nothing has no return to attach the declaration to. One decision shows the section doing real work. In Rita Hemchand Gandhi v. ITO (International Taxation), Mumbai (ITAT Mumbai, order pronounced 21 June 2024), a non-resident whose only income was interest, on which the payer had deducted at ten per cent instead of the twelve and one-half per cent treaty rate, filed no return in reliance on section 115G; when the shortfall was detected on reopening she paid the balance immediately and the assessment was made at the returned figure. The Tribunal deleted the section 271(1)(c) penalty, holding that the error was the deductor's and not the assessee's. The case is an answer to a penalty rather than to the charge, and that is how it should be pleaded. If it applies to you, the first step is this: List every item of Indian income for the year before advising that no return is due. One item outside investment income and long-term capital gains destroys the exemption for the whole year.
As printed on the Year 2026 departmental page under the heading 'Return of income not to be filed in certain cases', section 115G reads: '115G. It shall not be necessary for a non-resident Indian to furnish under sub-section (1) of section 139 a return of his income if— (a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of long-term capital gains or both; and (b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.' The archived Year 2000 page prints the identical words under the identical heading. The matter was decided on 1983-06-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. A non-resident Indian need not furnish a return of income under section 139(1) where two conditions are both satisfied: his total income assessable under the Act during the previous year consisted only of investment income or income by way of long-term capital gains or both, and the tax deductible at source under Chapter XVII-B has been deducted from that income. The conditions are cumulative and the section addresses only the obligation to furnish a return under section 139(1).
Not applicable — this is a statement of statutory text. No judicial reasoning is involved, and no decision construing the section against a competing construction was located this pass, though section 115G was applied by the ITAT Mumbai in Rita Hemchand Gandhi v. ITO (International Taxation) (order pronounced 21 June 2024). In the words reproduced by the source cited on this page: "It shall not be necessary for a non-resident Indian to furnish under sub-section (1) of section 139 a return of his income if— (a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of long-term capital gains or both; and (b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income."
It was decided by the CBDT Circulars & Instructions on 1983-06-01 and is reported as Income-tax Act, 1961, s.115G, as inserted with Chapter XII-A by the Finance Act 1983 with effect from 1 June 1983. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 115G, section 115C, section 115D, section 115E, section 115H, section 139, section 139(1), section 271(1)(c), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. A non-resident Indian need not furnish a return of income under section 139(1) where two conditions are both satisfied: his total income assessable under the Act during the previous year consisted only of investment income or income by way of long-term capital gains or both, and the tax deductible at source under Chapter XVII-B has been deducted from that income. The conditions are cumulative and the section addresses only the obligation to furnish a return under section 139(1). It arises in Residence & Treaty Benefit, TDS Defaults, Assessment & Scrutiny and Refunds, Interest & Condonation matters, on section 115G, section 115C, section 115D, section 115E, section 115H, section 139, section 139(1), section 271(1)(c) of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Obtain Form 16A or the Form 26AS / annual information statement entries and confirm that tax was actually deducted at the rate deductible under Chapter XVII-B, not merely that something was deducted. File anyway wherever a refund, a treaty rate, a carry-forward of loss or a section 115H declaration is in play — section 115G removes an obligation, it does not create an advantage. If a notice under section 142(1) or section 148 has been issued, do not answer it by citing section 115G alone: the section addresses the section 139(1) obligation, and a return called for by notice must be dealt with on its own terms. Where the client intends to become resident and to keep the chapter's benefit, remember that section 115H needs a declaration furnished with the return under section 139 — plan the first resident year's filing accordingly.
Still good law. The Year 2000 and Year 2026 departmental pages print identical text under an identical heading and neither carries any amendment footnote, which is the best evidence available on this pass that the section has not been amended since it was inserted with effect from 1 June 1983. No Finance Act text was retrieved this pass. Section 115G was applied by the ITAT Mumbai in Rita Hemchand Gandhi v. ITO (International Taxation) Ward 2(3)(1), I.T.A. No. 50/Mum/2024, order pronounced 21 June 2024, to delete a penalty under section 271(1)(c) on a non-resident who had not filed a return. That order does not construe the section against a competing construction, and no decision doing so was located. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The current text was transcribed this pass from https://incometaxindia.gov.in/w/section-115g-45, which prints the heading 'Return of income not to be filed in certain cases', the Act name 'Income-tax Act, 1961' and the stamp 'Year: 2026', and independently from the archived /w/section-115g (Year: 2000), which prints identical words under the same heading. Neither page carries any footnote entries, so on the material read this pass the section has stood unchanged since it was inserted with the rest of Chapter XII-A by the Finance Act 1983 with effect from 1 June 1983 — that insertion date is printed as footnote 21 on /w/section-115c-25 (Year: 1983), footnote 23 on /w/section-115c-20 (Year: 1997), footnote 19 on /w/section-115c (Year: 2000) and footnote 41 on /w/section-115c-31 (Year: 2014), each of which names sections 115C to 115-I together. Section 115G has been applied by a Tribunal speaking in its own voice. In Rita Hemchand Gandhi v. ITO (International Taxation) Ward 2(3)(1), Mumbai, I.T.A. No. 50/Mum/2024, assessment year 2013-14, the ITAT Mumbai 'D' Bench (Prashant Maharishi, Accountant Member and Sunil Kumar Singh, Judicial Member) held at its paragraph 010 that 'According to provisions of section 115G non-resident assessee is not required to file her return of income under section 139 (1) if total income in respect of which she is assessable under this act during the previous year consisted only of investment income or income by way of a long-term capital gain or both and tax deductible at source under the provisions of chapter XVII B has been deducted from such income', and on that footing deleted a penalty under section 271(1)(c) levied on a non-resident who had filed no return because tax had been deducted at source on her only income, the shortfall having arisen from the deductor deducting at ten per cent instead of the treaty rate of twelve and one-half per cent; the appeal was allowed. The order was read in full at indiankanoon.org/doc/34510674/. It is pronounced 21 June 2024 on the face of the order, though the indiankanoon index line dates it 24 June 2024. No decision construing the words of section 115G against a competing construction was located. A warning for later passes: an indiankanoon phrase search for section 115G(b) returns nil unless the words 'under the provisions of' are included, so a nil from that index is not evidence of absence. The consequences of section 115G for sections 142(1) and 148, and the Form 26AS reference, are practitioner context and are not statements taken from any provision retrieved this pass. 'decided_on' is the COMMENCEMENT DATE of Chapter XII-A (1 June 1983), not a decision date; 'bench' is 'Not applicable — statutory text' and 'favours' is null for the same reason. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A non-resident Indian need not furnish a return of income under section 139(1) where two conditions are both satisfied: his total income assessable under the Act during the previous year consisted only of investment income or income by way of long-term capital gains or both, and the tax deductible at source under Chapter XVII-B has been deducted from that income. The conditions are cumulative and the section addresses only the obligation to furnish a return under section 139(1).
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