Section 210
Section 210: tax on Foreign Institutional Investor and specified fund income from securities
Section 210 fixes flat tax rates for a Foreign Institutional Investor (FII) or a "specified fund" on income from securities other than the units covered by Section 208, and on capital gains from transferring such securities.
The rates
Where the total income of a specified fund or FII includes the income below, tax is computed at these flat rates on that income, with the rest of the total income taxed at the rates otherwise in force:
| Income | Rate of income-tax payable |
|---|---|
| Income from securities (other than units covered by Section 208) | 20% for a Foreign Institutional Investor; 10% for a specified fund |
| Short-term capital gains (not of the kind covered by Section 196) from transfer of such securities | 30% |
| Short-term capital gains of the kind covered by Section 196 from transfer of such securities | 20% |
| Long-term capital gains (not of the kind covered by Section 198) from transfer of such securities | 12.5% |
| Long-term capital gains of the kind covered by Section 198 exceeding ₹1,25,000 from transfer of such securities | 12.5% |
| Total income as reduced by the above categories | Rates in force |
Special rules for a "specified fund"
For a specified fund, this section applies only to the extent of income attributable to units held by non-residents (excluding a non-resident's permanent establishment in India), calculated in the prescribed manner.
Where the specified fund is an investment division of an offshore banking unit, this section applies to the extent of income attributable to that investment division (as a Category-I portfolio investor under SEBI's Foreign Portfolio Investors Regulations, 2019), calculated in the prescribed manner.
Deduction restrictions and no indexation
If the specified fund's or FII's gross total income consists only of income from securities described above, no deduction is allowed under sections 28 to 58, 60 and 61, section 93(1)(a) or (e), or Chapter VIII.
If the gross total income includes any of the income described above among other income, the gross total income is first reduced by that income, and Chapter VIII deductions are then allowed as if the reduced amount were the gross total income.
The indexation provision (section 72(6)) does not apply when computing these capital gains.
Key definitions
| Term | Meaning |
|---|---|
| "Foreign Institutional Investor" | An investor specified in a Central Government notification |
| "Permanent establishment" | As defined in section 173(c) |
| "Securities" | As defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956 |
| "Specified fund" | As defined in Schedule VI (Note 1) |
Frequently asked questions
What is the rate difference between an FII and a specified fund on securities income?
20% for a Foreign Institutional Investor versus 10% for a specified fund, on income from securities other than the units covered by Section 208.
Does a specified fund get taxed under Section 210 on all its income?
No - it applies only to the extent the income is attributable to units held by non-residents (excluding any Indian permanent establishment of such non-residents), calculated in the prescribed manner.
Related sections
Want this applied to your actual filing, not just explained?
Get help with your FII/specified fund Indian tax positionLast updated 9 September 2026