Income Tax Act 2025: Section 210 for Tax Year 2026-27

Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer

[Section-210 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

Section 210(1) of Income Tax Act 2025

210(1) The income-tax payable on total income of an assessee, being a specified fund or Foreign Institutional Investor, which includes the income referred to in column B of the Table below, shall be the aggregate of the amounts mentioned in column C thereof.

Table

Section 210(2) of Income Tax Act 2025

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

Section 210(3) of Income Tax Act 2025

210(3) Irrespective of anything contained in sub-section (1), where the specified fund––

• (a) is investment division of an offshore banking unit as specified against serial number 1 of the Table in Schedule III.6; and
• (b) fulfills the conditions referred to in clause (g)D(ii) of cell E1 of the Table in Schedule VI (Note 1),

the provisions of this section shall apply to the extent of income that is attributable to such investment division, calculated in the manner, as prescribed.

Section 210(4) of Income Tax Act 2025

210(4) Where the gross total income of the specified fund or Foreign Institutional Investor—

• 210(4)(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 26 to 61 or section 93(1)(a) or (e) or under Chapter VIII;
• 210(4)(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.

Section 210(5) of Income Tax Act 2025

210(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).

Section 210(6) of Income Tax Act 2025

210(6) In this section,––

• (a) “Foreign Institutional Investor” means an investor so 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;
• (d) “specified fund” shall have the meaning assigned to it in Schedule VI [Note 1]

FAQs on Section 210 of Income Tax Act 2025

What types of income are covered under Section 210(1) for Foreign Institutional Investors (FIIs)?
Section 210(1) covers income from securities (other than units referred to in section 208) and capital gains arising from their transfer, including short-term and long-term capital gains, whether or not they fall under specific sections like 196 or 198.

What is the income tax rate on securities income for Foreign Institutional Investors under this section?
The income tax rate is 20% for FIIs on income from securities other than specified units.

What is the rate of tax on short-term capital gains (STCG) not covered under section 196?
Short-term capital gains not referred to in section 196 are taxed at 30%.

What is the tax rate on STCG covered under section 196?
STCG under section 196 is taxed at 20%.

What is the tax rate on long-term capital gains (LTCG) not covered under section 198?
Such LTCG is taxed at 12.5%.

How are long-term capital gains under section 198 taxed when they exceed ₹1,25,000?
They are also taxed at 12.5% for the amount exceeding ₹1,25,000.

How is the tax calculated if total income includes income from both securities and other sources?
Income from securities and capital gains listed in the table is taxed at specified rates, and the remaining income is taxed as per applicable income tax rates after excluding the amounts already taxed under section 210(1).

Does Section 210 allow deductions under Chapter VIII for FIIs?
If the gross total income consists only of income referred to in Sl. No. 1 of the table, no deduction is allowed. If it includes other types listed in Sl. No. 2 to 5, the income is reduced by those amounts and deductions under Chapter VIII are allowed on the remaining income.

Are specified funds treated the same as FIIs under this section?
Yes, but with special conditions. The section applies only to income attributable to units held by non-residents (not having a permanent establishment in India) as per Section 210(2).

What are the special provisions for investment divisions of offshore banking units?
If a specified fund qualifies as an investment division of an offshore banking unit under specified conditions in Schedule III.6 and Schedule VI Note 1, Section 210 applies only to income attributable to that investment division, calculated as prescribed.

Are loss carry-forward provisions under section 72(6) applicable to gains taxed under Section 210?
No, section 72(6) does not apply to capital gains taxed under Sl. Nos. 2 to 5 of Section 210(1).

What is the definition of a Foreign Institutional Investor in this section?
A Foreign Institutional Investor is one specified by a notification issued by the Central Government.

What is the meaning of ‘permanent establishment’ in this context?
It carries the meaning assigned in section 173(c) of the Act.

What is the definition of ‘securities’ for the purposes of Section 210?
It has the same meaning as assigned in section 2(h) of the Securities Contracts (Regulation) Act, 1956.

How is ‘specified fund’ defined for purposes of this section?
‘Specified fund’ is defined in Schedule VI [Note 1] of the Income Tax Act, 2025.