Section 213 - Special provision for computation of total income of non-residents
The special income is ring-fenced from ordinary deductions. Mixed-income returns need a clear reduced-GTI bridge.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current law and effective date
Section 213 is controlled against the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026; earlier tax years and saved proceedings require the repeal-and-savings framework rather than automatic migration.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
The special income is ring-fenced from ordinary deductions. Mixed-income returns need a clear reduced-GTI bridge.
Who should use this section
Non-residents, foreign companies, funds, trusts, business trusts, investment vehicles and their advisers when receipts or distributions can fall within the special computation or rate architecture of section 213.
How section 213 works in practice
Section 213 sits in Chapter 13 (Determination of Tax in Special Cases) and should be read as a connected rule rather than an isolated label. The practical question is whether the facts actually satisfy the trigger for “Special provision for computation of total income of non-residents”. For section 213, begin by characterising the person, instrument and receipt before applying a rate. In a section 213 file, residence, treaty entitlement, beneficial ownership, source, permanent-establishment nexus, foreign-currency acquisition, fund/trust status and distribution reporting can move the same cash receipt into different tax buckets. The section 213 computation should therefore be reconciled to withholding and return reporting rather than prepared in isolation. The operating controls are: Prepare special-income versus ordinary-income reconciliation; Block direct and indirect expense deduction against investment income; Apply Chapter VIII only to reduced GTI. A reviewer should record why prepare special-income versus ordinary-income reconciliation., because that conclusion drives the downstream computation, reporting or procedural consequence.
Old-law bridge
section 115D
The old-law bridge is a research aid, not an automatic precedent transfer. Match the old provision, the current section, saved proceedings and effective dates before importing an older interpretation.
Current-law control
No separate Finance Act 2026 delta is recorded for section 213 in the current-law register. The page therefore follows the consolidated Act wording and the current Rules mapping, with the official consolidated statute controlling if a later notification or amendment affects the provision.
Professional alert
Prepare special-income versus ordinary-income reconciliation. Block direct and indirect expense deduction against investment income. Apply Chapter VIII only to reduced GTI.
Connected Income-tax Rules, 2026 and Forms
| Rule | Current control | Form |
|---|---|---|
| No provision-specific Rule/Form is directly mapped in this tranche. Apply the section itself and test any separate Rule only where another provision expressly cross-refers to it. | ||
Worked application
An NRI has investment income ₹5 lakh and salary income ₹3 lakh. Chapter VIII deduction eligibility is tested against GTI reduced by the investment-income bucket.
Evidence / compliance checklist
- Prepare special-income versus ordinary-income reconciliation.
- Block direct and indirect expense deduction against investment income.
- Apply Chapter VIII only to reduced GTI.
- Preserve residence/treaty and beneficial-ownership evidence relevant to section 213.
- Reconcile gross receipts, withholding certificates and return disclosure for section 213.
- Keep instrument, acquisition-currency and distribution records where section 213 depends on them.
Common mistake
Applying the domestic special rate in section 213 without first testing character, source and treaty interaction. For section 213, the 1961 Act bridge helps research, but the current 2025 Act wording and section 159 treaty comparison control the final position.
Recommended approach
For section 213, create a one-page legal-to-evidence matrix. For section 213, put the current statutory condition in the first column, the transaction or procedural fact in the second, the supporting document in the third, and the tax/procedural consequence in the fourth. The first checkpoint should be: Prepare special-income versus ordinary-income reconciliation. This section 213 matrix makes reviewable differences visible before a return, opinion, notice response or litigation position is finalised.
Thresholds, rates, periods and timing checkpoints
- ₹5 lakh
- ₹3 lakh
Related provisions and interaction map
Section 213 interacts with residence/source rules, section 159 treaty relief, withholding, return obligations and the legal character of the receipt or distribution. Where section 213 uses a trust/fund statement, the payor and recipient records should reconcile to the same tax bucket.
Direct navigation / cross-checks: section 212, section 214
Validated statutory core - official current source controlled
Text-status note: This page presents a validated operative statutory core rather than pretending a summary is verbatim law. Use the linked official consolidated Act before quoting sub-section language in a filing, opinion or litigation document.
Primary-source trail
Statute: Income-tax Act, 2025 as amended by Finance Act, 2026
Rules: Income-tax Rules, 2026
Law navigation: Income Tax Department 2025 Act / Rules hub
Quoting note: The official consolidated Act controls verbatim legislative language.
FAQs
Does an old Income-tax Act, 1961 decision automatically decide section 213?
No. The old-law bridge helps research, but transferability depends on materially matching language, transition rules and any Finance Act 2026 change.
Which source should be quoted in advice or litigation?
Quote the official consolidated statute for the relevant tax year. Where this page presents a validated statutory core rather than complete verbatim text, use the official Act for sub-section wording.
What should be checked immediately before acting?
Re-check the current statutory text, the section-specific Rule/Form mapping and any notification or court order relevant to the exact facts. Section 213 should not be applied from a historic section number or a generic tax summary alone.