Section 216 of the Income-tax Act, 2025 — Return of Income Not to Be Furnished in Certain Cases (NRI ITR Filing Exemption)

In plain language

Section 216 of the Income-tax Act, 2025 gives a genuine compliance relief to Non-Resident Indians (NRIs): if your entire Indian income for the tax year consists only of investment income from foreign exchange assets, or long-term capital gains (LTCG) on such assets, or both — and the correct tax has already been deducted at source (TDS) — you are not required to file an income-tax return in India at all. It is the direct successor of the well-known Section 115G of the Income-tax Act, 1961, carried into the new Act (effective 1 April 2026) with only the cross-references updated.

What Section 216 actually says

The provision is short and precise. It shall not be necessary for a non-resident Indian to furnish a return of income under Section 263(1) (the general return-filing obligation of the 2025 Act, equivalent to old Section 139(1)), if both of the following are satisfied:

• Condition (a) — nature of income: the NRI's total income during the tax year consisted only of investment income, or income by way of long-term capital gains, or both; and
• Condition (b) — TDS deducted: the tax deductible at source under Chapter XIX-B of the 2025 Act (the TDS chapter, equivalent to old Chapter XVII-B) has actually been deducted from such income.

Who can use this exemption

• Only "non-resident Indians" as defined in Section 212: an individual who is a non-resident and is either a citizen of India or a person of Indian origin. Companies, firms and foreign nationals with no Indian origin cannot use it.
• Only income within the special NRI regime (Sections 212–218): "investment income" means income derived from a foreign exchange asset — a specified asset (shares of an Indian company, debentures of or deposits with a public Indian company, Central Government securities, or other notified assets) acquired with convertible foreign exchange. "Long-term capital gains" means gains on such foreign exchange assets that are not short-term.

Key conditions and traps to watch

• Any other income breaks the exemption. Even ₹1 of Indian salary, house-property rent, business income, or short-term capital gains means you must file under Section 263(1).
• TDS must actually be deducted — in full. If the payer failed to deduct, or deducted less than the tax deductible, condition (b) fails and a return becomes mandatory.
• Short-term capital gains are not covered. Only long-term gains on foreign exchange assets qualify.
• Refunds still need a return. If excess TDS was deducted (say, you are entitled to the Section 215 reinvestment exemption or a lower treaty rate), the only way to claim the refund is to voluntarily file a return — Section 216 is an option, not a bar.

How it fits with the rest of the NRI chapter

• Section 214 taxes the NRI's investment income at a flat 20% and LTCG on specified assets at 12.5% — since these are flat, final-style rates fully collected through TDS, a return adds nothing, which is exactly why Section 216 waives it.
• Section 213 denies expenditure and Chapter VIII deductions against such income, so there is no computation the NRI could dispute in a return.
• Section 215 exempts LTCG if the net consideration is reinvested in specified assets within six months — but claiming this usually means filing a return to recover the TDS.
• Section 218 lets the NRI opt out of the whole special regime for a year; if you opt out, Section 216's shelter goes with it.

Practical implications

For an NRI in Dubai, Singapore or the US whose only Indian footprint is NRE/FCNR-funded shares, public-company debentures or Government securities, Section 216 means zero ITR compliance: the 20% / 12.5% TDS is the beginning and the end of the matter. But keep your TDS certificates (Form 16A) and check Form 26AS/AIS every year — the exemption stands on the TDS actually having been deducted, and filing voluntarily remains the smart move whenever a refund or treaty benefit is on the table.