Section 215 — NRI LTCG Reinvestment | ITA 2025

Section 215 — - NRI LTCG REINVESTMENT EXEMPTION

Section 215 is the substantive equivalent of 1961 s. 115F -- the special reinvestment exemption for NRI LTCG from foreign exchange asset transfer. Where NRI transfers a foreign exchange asset and reinvests net consideration into another specified asset within 6 months, the LTCG is exempt to the extent of reinvestment. CGAS-style deposit available for 6-month-prelim utilisation. 3-year holding lock on new asset. The provision parallels s. 86 (general 54F) but tailored for NRI-investor profile -- specifically targeting reinvestment-into-Indian-asset by returning / continuing NRIs.

Statutory text — Income-tax Act, 2025

Marginal note -- NRI LTCG reinvestment exemption

(1) Where, in case of an assessee, being a non-resident Indian,—

(a) any long-term capital gains arises from the transfer of a foreign exchange asset (herein referred to as original asset); and

(b) within six months after the date of such transfer, he has invested the whole or any part of the net consideration in any specified asset (herein referred to as new asset), then the capital gains shall be dealt with in the following manner:—

(i) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 67;

(ii) if the cost of the new asset is less than the net consideration in respect of the original asset, then the capital gain computed by the following formula shall not be charged under section 67:— C A=B× D Where, A = the capital gains not to be charged under section 67; B = whole of the capital gain; C = cost of acquisition of the new asset; D = net consideration in respect of the original asset.

(2) For the purposes of sub-section (1),—

(a) “cost”, in relation to any new asset, being a deposit referred to in section 212(e)(iii) or (v), means the amount of such deposit;

(b) “net consideration” in relation to the transfer of the original asset, means the full value of the consideration received or accruing as a result of the transfer of such asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.

(3) Where the new asset is transferred or converted (otherwise than by transfer) into money, within three years from date of its acquisition, the capital gain arising from transfer of original asset not so charged under section 67 on the basis of the cost of such new asset as provided in sub-section (1)(i) or (ii), shall be deemed to be income by way of capital gains relating to capital assets other than short-term capital assets of the tax year in which the new asset is transferred or converted (otherwise than by transfer) into money. Return of income not to be furnished in certain cases.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 215	INCOME-TAX ACT, 1961 -- s. 115F
NRI LTCG on foreign exchange asset reinvest in specified asset / 6 months	1961 s. 115F(1)
Proportionate exemption based on net consideration vs cost	1961 s. 115F(1)
3-year holding lock claw-back	1961 s. 115F(2)

MECHANICS: where NRI has LTCG from foreign exchange asset transfer AND reinvests net consideration into ANOTHER SPECIFIED ASSET within 6 MONTHS after transfer: (a) Net consideration > cost of new asset: PROPORTIONATE exemption; (b) Net consideration <= cost: FULL exemption. Specified asset for reinvestment: Indian-Govt securities / Indian-co debentures / Indian-bank deposits / Indian-co equity. 3-YEAR HOLDING LOCK: if new asset transferred within 3 years, exemption clawed back via cost-reduction. PRACTITIONER: typical NRI-investor cycle -- mature debt instrument matures, reinvested in fresh debt within 6 months; LTCG exempt. Alternative: NR convert to resident status; lose NRI-regime benefits.

CROSS-REFERENCES

Section 212 -- Definitions / 'specified asset'.
Section 214 -- NRI LTCG rate.
Section 67 / 72 -- General CG framework.
Section 86 -- s. 54F equivalent (alternative for residents).

← All sections (537)Act 2025 hub