Computation of total income of non-residents

No deduction for any expense or allowance under any provision of this Act shall be permitted in calculating the investment returns of a non-resident Indian.

Where in the case of a non-resident Indian taxpayer,

(a) No deduction under Chapter VIA or the rules of the second proviso to Section 48 shall be applicable to income charged under the head "Capital gains" if the gross total income consists exclusively of investment income, income from long-term capital gains, or both.

(b) Any income mentioned in a clause is included in the gross total income; however, the gross total income is reduced by the amount of such income, and Chapter VIA deductions are permitted as if the assessee's gross total income were the gross total income after the reduction.

After making the required deductions and accounting for the allowances permitted in computing income under each head of income, the total income is first calculated individually for each head of income. Gross total income is the sum of all money earned under all sources of income.

Don't miss an awesome article on section 80g.

The gross total income does not include any income that is entirely tax-exempt. From the gross total income, certain deductions in relation to investments in bank deposits, etc., are permitted. Technically referred to as the "total income" of the non-resident Indian for a prior year in reference to a certain assessment year, the remainder is the non-resident Indian's taxable income. At, losses from one source of income may be offset against profits from another source falling under the same type of income. Any short-term capital loss relating to any capital asset in the same assessment year may be offset by any short-term or long-term capital gain. However, short-term capital gains cannot be offset by long-term capital losses; only taxable long-term capital gains can do so.

According to Section 71B of the 1.T. Act, 1961, losses under the heading "Revenue from house property" that cannot be offset as mentioned above may be carried forward to the next 8 assessment years and offset against income from house property. According to Section 72 of the I.T. Act, an unabsorbed business loss may be carried over for the next eight assessment years to be offset against revenue reported under the heading "Profits and Gains of Business or Profession."

You can get more benefits by visiting deduction under section 80g.