Section 210 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 210 sets the rates at which a specified fund or a Foreign Institutional Investor is taxed on income from securities and on capital gains from their transfer. Income in respect of securities is taxed at 20% for a Foreign Institutional Investor and 10% for a specified fund; short-term capital gains at 30% or, where section 196 applies, 20%; and long-term capital gains at 12.5%. This article reads the section as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
A Foreign Institutional Investor pays 20%, and a specified fund pays 10%, on income in respect of securities other than units referred to in section 208. Short-term capital gains are taxed at 30%, or 20% where they are the gains referred to in section 196. Long-term capital gains are taxed at 12.5%, including the gains referred to in section 198 which exceed Rs. 125000. The balance of total income is taxed at rates in force, and section 72(6) does not apply.
Scope
Section 210 is in Chapter XIII, Part E. The Act came into force on the 1st April, 2026 (section 1(3)), save as otherwise provided. The rates are those printed in the section; later amendments, rules and notifications should be checked. A "Foreign Institutional Investor" is, under sub-section (6)(a), an investor specified in a notification by the Central Government; what has been notified is not in the text consulted, so this article names no investor.
The preceding provisions are section 207 and sections 208 and 209. The capital gains rates in sections 196 and 198 are explained in our posts on section 196 (short-term gains on equity) and section 198 (long-term gains on equity). For the Chapter overview, see Chapter XIII of the Income-tax Act, 2025. If you invest in Indian securities from outside India, our NRI tax filing team can help.
Section 210(1): the Table
The income-tax payable on the total income of an assessee, being a specified fund or Foreign Institutional Investor, which includes income in column B is the aggregate of income-tax computed at the rate in column C applied on the corresponding income in column B.
| Serial number | Income | Rate of income-tax payable |
|---|---|---|
| 1 | Income in respect of securities other than units referred to in section 208 | (a) 20% in case of Foreign Institutional Investor; (b) 10% in case of specified fund |
| 2 | Short-term capital gains (not being short-term capital gains referred to in section 196) arising from the transfer of such securities | 30% |
| 3 | Short-term capital gains referred to in section 196 arising from the transfer of such securities | 20% |
| 4 | Long-term capital gains (not being long-term capital gains referred to in section 198 arising from the transfer of such securities) | 12.5% |
| 5 | Long-term capital gains referred to in section 198 arising from the transfer of such securities which exceeds Rs. 125000 | 12.5% |
| 6 | Total income as reduced by income referred to against serial numbers 1 to 5 | Rates in force |
On row 5: the Table prints 12.5% against the long-term capital gains referred to in section 198 "which exceeds Rs. 125000". The Table gives no separate rate for the part up to Rs. 125000; the treatment of that part is a matter for section 198 and the rest of the Act, and the reader should check those provisions. The brackets in row 4 close after "such securities" in the printed text, and the row is read as long-term capital gains other than those referred to in section 198.
Section 210(2): specified fund and non-resident units
In case of a specified fund, the section applies only to the extent of income attributable to units held by a non-resident (not being a permanent establishment of such non-resident in India), calculated in the manner as may be prescribed, irrespective of sub-section (1). The calculation is left to the Income-tax Rules, 2026; see our rule-wise guides.
Section 210(3): investment division of an offshore banking unit
Irrespective of sub-section (1), where the specified fund is an investment division of an offshore banking unit, the section applies to the extent of income attributable to the 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 Portfolio 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. See our post on Schedule VI. The SEBI Regulations and Act named here should be checked by the reader.
Section 210(4): deductions
Where the gross total income of the specified fund or Foreign Institutional Investor:
| Clause | Case | Result |
|---|---|---|
| (a) | consists only of income in respect of securities in sub-section (1) (serial number 1) | no deduction is allowed 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) (serial numbers 1 to 5) | the gross total income is reduced by that income, and the Chapter VIII deduction is allowed as if the reduced amount were the gross total income |
Section 210(5): section 72(6)
The provisions of section 72(6) do not apply to the computation of capital gains arising from the transfer of securities in sub-section (1), serial numbers 2 to 5. See section 72 on capital gains computation.
Section 210(6): definitions
| Clause | Term | Meaning |
|---|---|---|
| (a) | "Foreign Institutional Investor" | such investor as specified in a notification by the Central Government |
| (b) | "permanent establishment" | the meaning assigned in section 173(c) |
| (c) | "securities" | the meaning assigned in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) |
| (d) | "specified fund" | the meaning assigned in Schedule VI |
The Securities Contracts (Regulation) Act, 1956 should be checked for the term "securities".
A worked example
Names and amounts are invented; the rates are as printed.
Halcyon Pension Fund is a Foreign Institutional Investor specified in a notification. In the tax year it has: interest of Rs. 10,00,000 on Indian securities (not units referred to in section 208); short-term capital gains of Rs. 6,00,000 that are not gains referred to in section 196; short-term capital gains of Rs. 4,00,000 that are gains referred to in section 196; long-term capital gains of Rs. 8,00,000 that are not gains referred to in section 198; and other income of Rs. 3,00,000.
- Serial number 1: Rs. 10,00,000 x 20% = Rs. 2,00,000.
- Serial number 2: Rs. 6,00,000 x 30% = Rs. 1,80,000.
- Serial number 3: Rs. 4,00,000 x 20% = Rs. 80,000.
- Serial number 4: Rs. 8,00,000 x 12.5% = Rs. 1,00,000.
- Serial number 6: the other Rs. 3,00,000 at rates in force (the Act prints no figure here).
- Tax on the five listed items = Rs. 2,00,000 + Rs. 1,80,000 + Rs. 80,000 + Rs. 1,00,000 = Rs. 5,60,000.
- Section 72(6) does not apply to the capital gains computation, and the gross total income is reduced by the listed items before Chapter VIII deductions are considered.
If the same income had been that of a specified fund instead, serial number 1 would be taxed at 10%, so Rs. 10,00,000 x 10% = Rs. 1,00,000, and only to the extent attributable to units held by a non-resident (sub-section (2)).
Need help with Foreign Institutional Investor taxation?
The classification of gains, the notification status of the investor and the attribution under sub-sections (2) and (3) all change the tax. Our NRI tax filing service can help you work through the Table and prepare the computation.
Key takeaways
- A Foreign Institutional Investor pays 20%, and a specified fund 10%, on income in respect of securities other than section 208 units.
- Short-term capital gains are taxed at 30%, or at 20% where they are the gains referred to in section 196.
- Long-term capital gains are taxed at 12.5%; for gains referred to in section 198 the Table prints 12.5% against the part exceeding Rs. 125000.
- Expenditure deductions are barred and Chapter VIII deductions are available on the reduced balance.
- Section 72(6) does not apply to the capital gains in serial numbers 2 to 5.
Read next
- Sections 208 and 209: units, bonds and GDRs bought in foreign currency
- Section 207: dividends, royalty and technical fees of foreign companies
- Section 196: short-term capital gains on equity
- Section 198: long-term capital gains on equity
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.