Section 210 — Specified Fund FII Rates | ITA 2025

Section 210 — - TAX ON SPECIFIED FUND / FII INCOME

Section 210 is the substantive equivalent of 1961 s. 115AD -- the special rate provision for SPECIFIED FUNDS (investment vehicles registered as Specified Fund per s. 9 / Schedule definitions; typically AIF Cat I/II/III) and FOREIGN INSTITUTIONAL INVESTORS (FIIs / FPIs registered with SEBI). Concessional rates: (a) Income from securities (interest / dividends): 20%; (b) STCG on securities: 30% (or 15% on STT-paid listed equity); (c) LTCG on securities: 10% / 12.5% (FA 2024) without indexation; (d) Specified-Fund Cat-III income with carve-outs. Subject to no-deduction / DTAA more-beneficial test.

Statutory text — Income-tax Act, 2025

Marginal note -- Tax on specified fund / FII income

(1) The income-tax payable on the total income of an assessee, being a specified fund or Foreign Institutional Investor, which includes income referred to 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 Sl. Income Rate of Income-tax No. payable

A B C

1. Income in respect of securities other than units referred (a) 20% in case of to in section 208. Foreign Insti- tutional Inves- tor;

(b) 10% in case of specified fund.

2. Short-term capital gains (not being short-term capital 30% gains referred to in section 196) arising from the transfer of such securities.

3. Short-term capital gains referred to in section 196 20% arising from the transfer of such securities.

4. Long-term capital gains (not being long-term capital 12.5% gains referred to in section 198 arising from the transfer of such securities).

5. Long-term capital gains referred to in section 198 12.5% arising from the transfer of such securities which exceeds ` 125000.

6. Total income as reduced by income referred to against Rates in force. serial numbers 1 to 5.

(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 may be prescribed, irrespective of the provisions of sub-section (1).

(3) Irrespective of anything contained in sub-section (1), where the specified fund is an investment division of an offshore banking unit, the provisions of this section shall apply to the extent of income that is attributable to such investment division referred to in clause (g)(ii) of Note 1 of the Table in Schedule VI as a Category-I portfolio investor under the Securities and Exchange Board of India (Foreign Port- folio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), calculated in such manner as may be prescribed.

(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 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. 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.

(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).

(6) For the purposes of this section,—

(a) “Foreign Institutional Investor” means such investor as 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 (42 of 1956);

(d) “specified fund” shall have the meaning assigned to it in Schedule VI [Note 1]. Tax on non-resident sportsmen or sports associations.

STATUTORY ARCHITECTURE: ELIGIBLE: SPECIFIED FUND -- Cat I/II/III AIF located in IFSC (per Schedule); OR FII / FPI per SEBI FPI Regulations 2019. RATES: (a) Income from securities (interest / dividends): 20%; (b) STCG on securities: 30% (general); 15% on STT-paid listed equity / equity-MF / business-trust units; (c) LTCG on securities: 10% (without indexation; pre-FA 2024) / 12.5% (post FA 2024); (d) Specified-Fund Cat-III: 100% pass-through to unit-holders (FA 2020 framework). CARVE-OUTS for IFSC-located specified funds: enhanced concessions per s. 147 IFSC unit deduction. CONDITIONS: no deduction for expenditure / allowance / loss set-off; book-keeping per Indian standards; SEBI / IFSCA registration requirement. DTAA INTERACTION: where treaty rate lower, DTAA prevails per s. 159. India-Mauritius / Singapore / Netherlands FPI structures common; post-2017 amendments tax CG in India on shares / debentures of Indian co.

CROSS-REFERENCES

Section 9 -- Source-rule deeming.
Section 147 -- IFSC unit deduction.
Section 159 -- DTAA framework.
Section 196 -- STCG general.
Section 197 -- LTCG general.
Section 198 -- STT-paid listed equity LTCG.
Section 209 -- NR general rates (parallel).
SEBI FPI Regulations 2019.

← All sections (537)Act 2025 hub

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 210	INCOME-TAX ACT, 1961 -- s. 115AD
Specified Fund / FII rates 20% / 30% / 12.5%	1961 s. 115AD