Section 216: return of income not to be furnished in certain cases

Introduction

Section 216 gives a non-resident Indian a narrow exception from furnishing a return under section 263(1). Both statutory conditions must be met for the tax year: total income must consist only of the specified investment income, long-term capital gains, or both, and tax deductible at source under Chapter XIX-B must have been deducted from that income.

The terms used in this Part, including “investment income” and “non-resident Indian”, are explained in section 212. Other kinds of income or a failure to deduct the relevant tax can take the person outside this particular exception.

Key takeaways

When the exemption applies

A non-resident Indian need not furnish a return of income under section 263(1) if:

• The total income for the tax year consisted only of investment income and/or long-term capital gains (as defined in section 212); and
• Tax deductible at source under Chapter XIX-B has been deducted from that income.

When this provision applies

Review the complete total-income composition for the relevant tax year. It must consist only of investment income or long-term capital gains, or both, using the Section 212 meanings; an unrelated taxable income component prevents reliance on this particular exception.

Reconcile the tax deductible under Chapter XIX-B with the tax actually deducted from the covered income. The mere presence of one TDS entry is not enough to establish that the statutory deduction condition has been met for the relevant income.

Limits and procedural safeguards

The wording is an exception from furnishing a return under Section 263(1). It does not establish immunity from every notice, information requirement or other obligation under the Act. Review any separate demand or filing requirement on its own terms.

Failure of a Section 216 condition means this exception is unavailable; the actual filing obligation must then be checked under the applicable return provisions. Conversely, satisfying it does not make the underlying income exempt from tax.

Step-by-step review

1. Confirm the person falls within the applicable NRI definition.

2. Reconcile all income and determine whether total income contains only the permitted categories.

3. Compare the required source deduction with deduction records for those categories.

4. Record the basis for the Section 263(1) exception and separately check any notice, refund claim or other filing requirement.

Hypothetical example

Hypothetical illustration: an eligible NRI has qualifying investment income with the required tax deducted, but also has taxable rent included in total income. Because the income is not confined to the Section 216 categories, this particular exception is unavailable. The general and other applicable filing provisions must then be examined.

Records to prepare

Residence and Section 212 classification records.

A complete total-income reconciliation, including any income outside this Part.

Tax-deduction statements and certificates reconciled to the tax deductible, plus any notices or refund claim records.

Official amended Act source

• Income-tax Act, 2025 as amended by Finance Act, 2026: Section 216 and related provisions

Step-by-step flow for applying Section 216

1. 1

   Is the person a non-resident Indian?

   Use the meaning in Section 212, which applies to this Part.

   • No: Section 216 is not available. Check the return requirement under Section 263(1) in the normal way.
   • Yes: Go to the next step.
2. 2

   Did total income for the tax year consist only of investment income, long-term capital gains, or both?

   Section 216(a). Look at the whole of total income, not just the income from foreign exchange assets.

   • No, there is some other income: Section 216 is not available. Check Section 263(1).
   • Yes: Go to the next step.
3. 3

   Has the tax deductible at source under Chapter XIX-B been deducted from that income?

   Section 216(b). Compare the tax that was deductible with what was actually deducted, item by item.

   • No, or only in part: Section 216 is not available. Check Section 263(1).
   • Yes, in full: Go to the next step.
4. 4

   Apply the exception

   It is not necessary to furnish a return under Section 263(1). Section 216 does not make the income exempt and does not deal with any other filing or notice; check those on their own terms.

Practical checklist

Glossary

Income-composition condition

The requirement that total income contain only the covered investment income, long-term capital gains, or both.

Source-deduction condition

The requirement that the Chapter XIX-B tax deductible from the covered income has been deducted.

Frequently asked questions