Chapter XIII - Determination of Tax in Special Cases
Section 214
Section 214: tax on NRI investment income and long-term capital gains
Section 214 sets three parts of the tax calculation for a non-resident Indian whose total income includes the listed categories: 20% on investment income, 12.5% on long-term capital gains on a specified asset, and rates in force on the balance.
On this page
Need advice on Section 214?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
The income-tax payable on the total income of an assessee, being a non-resident Indian, 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 — Sl. No. | Income | Rate of income-tax payable
1. | Income from investment. | 20%
2. | Income from long-term capital gains on specified asset. | 12.5%
3. | Total income as reduced by income referred to against serial numbers 1 and 2. | Rates in force.
Introduction
The income-tax payable is the aggregate of the tax computed for each corresponding table row. The section applies to an assessee who is a non-resident Indian and whose total income includes the listed income.
Key takeaways
Investment income
The table gives a 20% rate for income from investment.
Specified-asset gains
Long-term capital gains on a specified asset carry a 12.5% rate under the table.
Balance of total income
Total income after reducing those two categories is taxed at the rates in force.
Rates in Section 214
Tax is the aggregate of the amounts computed for each of the three table rows: 20% on investment income, 12.5% on long-term capital gains on a specified asset, and rates in force on the remainder of total income.
| Income | Rate |
|---|---|
| Income from investment | 20% |
| Long-term capital gains on specified asset | 12.5% |
| Total income reduced by those two categories | Rates in force |
Practical checklist
Do
- Separate qualifying investment income from long-term capital gains and other income.
- Confirm non-resident Indian eligibility and the applicable Chapter conditions before using special rates.
Avoid
- Apply the special rate to income not covered by the listed categories.
Illustrative example
Hypothetical split-rate calculation
Hypothetical facts (illustration only, not a real taxpayer): Assume a qualifying non-resident Indian has ₹1,00,000 of investment income from a foreign exchange asset, ₹2,00,000 of long-term capital gains on a specified asset, and ₹3,00,000 of other total income. These figures are illustrative.
Investment component
Apply the table's 20% rate to ₹1,00,000: ₹20,000.
Long-term gain component
Apply the table's 12.5% rate to ₹2,00,000: ₹25,000.
Remaining component
Apply the rates in force to the remaining ₹3,00,000; its tax cannot be derived without the applicable rate facts.
Outcome
- Section 214's table yields ₹45,000 for the two specified components, plus tax on the balance at rates in force. Section 213 separately controls permissible deductions. This illustration excludes any applicable surcharge, cess and other adjustments.
Glossary
- Rates in force
- The applicable rates for the balance of total income under the Act; section 214 does not state one flat rate for that balance.
- Specified asset
- An asset in section 212(e); the definition is used for the long-term capital gains row.
Frequently asked questions
What rate does Section 214 list for income from investment?
20%.
What rate does it list for long-term capital gains on a specified asset?
12.5%.
How is the rest of total income taxed under this table?
At the rates in force.
Need help applying this provision to your situation?
Get help with your NRI investment income tax rateLast updated 10 October 2026