Can I claim the benefit under Section 115H if I am a resident of India?

I had this question when I returned to India from the UK. What confused me initially was thinking that Section 115H was only for people who continued to be NRIs.

Actually, the section is specifically designed for the situation where an NRI becomes resident. You can potentially continue the special treatment for qualifying investment income if you satisfy the conditions and make the required declaration.

The declaration is important. The provision says it should be furnished to the Assessing Officer along with the return of income for the assessment year in which you become assessable as a resident.

I'd therefore check the ITR instructions carefully rather than assuming the benefit applies automatically.

One thing I'd be careful about is the phrase "foreign exchange asset." It doesn't simply mean any asset that you happened to buy while living outside India.

Section 115H refers to investment income from a foreign exchange asset of the specified nature under Section 115C. So eligibility depends on how the asset was acquired and whether it falls within the statutory definition.

Also, the benefit isn't necessarily limited to the first year after returning to India. The provision says that, where the conditions are met and the declaration is made, the Chapter XII-A provisions can continue for that assessment year and subsequent assessment years until the relevant asset is transferred or converted into money.

I'd verify the exact asset and current ITR reporting requirements before claiming it.

Yes, becoming a resident doesn't automatically end the Section 115H benefit.

The provision specifically deals with a situation where a person was an NRI in an earlier previous year and subsequently becomes resident in India. The Income Tax Department says that such a person can furnish a declaration with the return stating that the relevant provisions of Chapter XII-A should continue to apply to qualifying investment income from foreign exchange assets.

So the important point is that you need to have been an NRI previously and have the type of qualifying foreign exchange asset covered by the provision.

I wouldn't assume that every investment made while living abroad qualifies, though. The definition of a foreign exchange asset is specific, so I'd check the nature and acquisition of the particular investment.