Section 215
Section 215: rollover relief on reinvestment in a new specified asset
Section 215 gives a non-resident Indian rollover relief similar to other capital-gains reinvestment exemptions in the Act: if the proceeds from selling a foreign exchange asset are reinvested in a new specified asset within six months, the long-term capital gain is not taxed - subject to a three-year clawback if the new asset is disposed of too soon.
When the exemption applies
The exemption applies where a non-resident Indian:
- Has long-term capital gains from transfer of a foreign exchange asset (the "original asset"); and
- Within six months after that transfer, invests the whole or part of the net consideration in a specified asset (the "new asset").
How much of the gain is exempt
If the cost of the new asset is not less than the net consideration of the original asset, the whole capital gain is not charged to tax under section 67.
If the cost of the new asset is less than the net consideration, only a proportionate part of the gain is exempt, computed by the formula:
- A = B x C / D
- A = the capital gain not charged to tax
- B = the whole capital gain
- C = cost of acquisition of the new asset
- D = net consideration in respect of the original asset
Key terms for the computation
| Term | Meaning |
|---|---|
| "Cost" of a new asset that is a deposit under section 212(e)(iii) or (v) | The amount of that deposit |
| "Net consideration" | The full value of the consideration received or accruing on transfer of the original asset, reduced by any expenditure incurred wholly and exclusively in connection with that transfer |
Clawback if the new asset is disposed of within three years
If the new asset is transferred, or converted (other than by transfer) into money, within three years of its acquisition, the capital gain that was not charged to tax (based on the cost of the new asset) becomes taxable - as long-term capital gains relating to a capital asset other than a short-term capital asset - in the tax year in which the new asset is transferred or so converted.
Frequently asked questions
How much time does an NRI have to reinvest to claim this exemption?
Six months from the date of transfer of the original foreign exchange asset.
What happens if the NRI sells the new asset soon after buying it?
If the new asset is transferred or converted into money within three years of acquisition, the previously exempted capital gain becomes taxable in the year of that later transfer or conversion.
Is the exemption reduced if only part of the sale proceeds is reinvested?
Yes - if the cost of the new asset is less than the net consideration from the original asset, only a proportionate part of the gain (computed by the formula in Section 215(1)) is exempt.
Related sections
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Plan your NRI capital gains reinvestment with our tax teamLast updated 9 September 2026