The NRI special investment regime — 20% + reinvestment exemption (§214/215, old 115E/F)

What the regime gives

• Investment income from specified foreign-exchange assets (shares, debentures, deposits of an Indian company bought in forex) taxed at a flat 20% — Section 214 (old 115E).
• Long-term capital gains on those assets taxed at a concessional rate.
• No return needed in some cases if tax is fully deducted (Section 216, old 115G).

The reinvestment exemption — Section 215 (old 115F)

If you reinvest the net proceeds of a long-term foreign-exchange asset into another specified asset/deposit within 6 months, the capital gain is exempt (proportionate if you reinvest part). Hold the new asset for 3 years.

The trade-off — and the opt-out

Under this regime you can't claim indexation or most deductions against that income. So compare it with normal taxation — for listed equity, the general ₹1.25 lakh LTCG exemption + 12.5% rate may be better. You can opt out per year under Section 218 (old 115-I) and be taxed normally.

Who it helps

NRIs holding Indian company shares/debentures/deposits acquired in foreign currency, especially when reinvesting gains.