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12/5/2016 IncomeTaxDepartment

Taxondividends,royaltyandtechnicalservicefeesinthecaseofforeigncompanies.
115A.(1)Wherethetotalincomeof
(a)anonresident(notbeingacompany)orofaforeigncompany,includesanyincomebywayof
(i)dividendsotherthandividendsreferredtoinsection115Oor
(ii) interest received from Government or an Indian concern on monies borrowed or debt
incurredbyGovernmentortheIndianconcerninforeigncurrencynotbeinginterestofthe
naturereferredtoinsubclause(iia)orsubclause(iiaa)or
(iia)interestreceivedfromaninfrastructuredebtfundreferredtoinclause(47)ofsection10or
(iiaa)interestofthenatureandextentreferredtoinsection194LCor
(iiab)interestofthenatureandextentreferredtoinsection194LDor
91[(iiac)distributedincomebeinginterestreferredtoinsubsection(2)ofsection194LBA]

(iii) income received in respect of units, purchased in foreign currency, of a Mutual Fund
specifiedunderclause(23D)ofsection10oroftheUnitTrustofIndia,
theincometaxpayableshallbeaggregateof
(A)theamountofincometaxcalculatedontheamountofincomebywayofdividendsother
thandividendsreferredtoinsection115O,ifany,includedinthetotalincome,attherate
oftwentypercent
(B)theamountofincometaxcalculatedontheamountofincomebywayofinterestreferredto
insubclause(ii),ifany,includedinthetotalincome,attherateoftwentypercent
(BA)theamountofincometaxcalculatedontheamountofincomebywayofinterestreferredto
insubclause(iia)orsubclause(iiaa)orsubclause(iiab) 92[orsubclause(iiac)],ifany,
includedinthetotalincome,attherateoffivepercen
(C)theamountofincometaxcalculatedontheincomeinrespectofunitsreferredtoinsub
clause(iii),ifany,includedinthetotalincome,attherateoftwentypercentand
(D) the amount of incometax with which he or it would have been chargeable had his or its
totalincomebeenreducedbytheamountofincomereferredtoinsubclause(i),subclause
(ii), subclause (iia), subclause (iiaa), subclause (iiab) 92[, subclause (iiac)] and sub
clause(iii)
(b) a nonresident (not being a company) or a foreign company, includes any income by way of
royaltyorfeesfortechnicalservicesotherthanincomereferredtoinsubsection(1)ofsection
44DAreceivedfromGovernmentoranIndianconcerninpursuanceofanagreementmadebythe
foreigncompanywithGovernmentortheIndianconcernafterthe31stdayofMarch,1976,and
where such agreement is with an Indian concern, the agreement is approved by the Central
Governmentorwhereitrelatestoamatterincludedintheindustrialpolicy,forthetimebeingin
force,oftheGovernmentofIndia,theagreementisinaccordancewiththatpolicy,then,subject
totheprovisionsofsubsections(1A)and(2),theincometaxpayableshallbetheaggregateof,

(A)theamountofincometaxcalculatedontheincomebywayofroyalty,ifany,includedinthe
totalincome,attherateof93[ten]percent
(B)theamountofincometaxcalculatedontheincomebywayoffeesfortechnicalservices,if
any,includedinthetotalincome,attherateof93[ten]percentand
(C)theamountofincometaxwithwhichitwouldhavebeenchargeablehaditstotalincome
beenreducedbytheamountofincomebywayofroyaltyandfeesfortechnicalservices.
Explanation.Forthepurposesofthissection,
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12/5/2016 IncomeTaxDepartment

(a) "fees for technical services" shall have the same meaning as in Explanation2 to clause (vii) of
subsection(1)ofsection9
(b) "foreign currency" shall have the same meaning as in the Explanation below item (g) of sub
clause(iv)ofclause(15)ofsection10
(c) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of subsection (1) of
section9
(d)"UnitTrustofIndia"meanstheUnitTrustofIndiaestablishedundertheUnitTrustofIndiaAct,
1963(52of1963).
(1A)Wheretheroyaltyreferredtoinclause(b)ofsubsection(1)isinconsiderationforthetransferofall
oranyrights(includingthegrantingofalicence)inrespectofcopyrightinanybooktoanIndianconcern
orinrespectofanycomputersoftwaretoapersonresidentinIndia,theprovisionsofsubsection(1)shall
applyinrelationtosuchroyaltyasifthewordstheagreementisapprovedbytheCentralGovernmentor
whereitrelatestoamatterincludedintheindustrialpolicy,forthetimebeinginforce,oftheGovernment
ofIndia,theagreementisinaccordancewiththatpolicyoccurringinthesaidclausehadbeenomitted:
Providedthatsuchbookisonasubject,thebooksonwhicharepermitted,accordingtotheImportTrade
ControlPolicyoftheGovernmentofIndiafortheperiodcommencingfromthe1stdayofApril,1977,
andendingwiththe31stdayofMarch,1978,tobeimportedintoIndiaunderanOpenGeneralLicence:
ProvidedfurtherthatsuchcomputersoftwareispermittedaccordingtotheImportTradeControlPolicy
oftheGovernmentofIndiaforthetimebeinginforcetobeimportedintoIndiaunderanOpenGeneral
Licence.
Explanation1.Inthissubsection,"OpenGeneralLicence"meansanOpenGeneralLicenceissuedby
theCentralGovernmentinpursuanceoftheImports(Control)Order,1955.
Explanation2.Inthissubsection,theexpression"computersoftware"shallhavethemeaningassigned
toitinclause(b)oftheExplanationtosection80HHE.
(2)Nothingcontainedinsubsection(1)shallapplyinrelationtoanyincomebywayofroyaltyreceived
byaforeigncompanyfromanIndianconcerninpursuanceofanagreementmadebyitwiththeIndian
concern after the 31st day of March, 1976, if such agreement is deemed, for the purposes of the first
provisotoclause(vi)ofsubsection(1)ofsection9,tohavebeenmadebeforethe1stdayofApril,1976
andtheprovisionsoftheannualFinanceActforcalculating,charging,deductingorcomputingincome
tax shall apply in relation to such income as if such income had been received in pursuance of an
agreementmadebeforethe1stdayofApril,1976.
(3) No deduction in respect of any expenditure or allowance shall be allowed to the assessee under
sections28to44Candsection57incomputinghisoritsincomereferredtoinsubsection(1).
(4)Whereinthecaseofanassesseereferredtoinsubsection(1),
(a)thegrosstotalincomeconsistsonlyoftheincomereferredtoinclause(a)ofthatsubsection,no
deductionshallbeallowedtohimoritunderChapterVIA
(b)thegrosstotalincomeincludesanyincomereferredtoinclause(a)ofthatsubsection,thegross
totalincomeshallbereducedbytheamountofsuchincomeandthedeductionunderChapterVI
Ashallbeallowedasifthegrosstotalincomeassoreducedwerethegrosstotalincomeofthe
assessee.
(5)Itshallnotbenecessaryforanassesseereferredtoinsubsection(1)tofurnishundersubsection(1)
ofsection139areturnofhisoritsincomeif
(a)hisoritstotalincomeinrespectofwhichheoritisassessableunderthisActduringtheprevious
yearconsistedonlyofincomereferredtoinclause(a)ofsubsection(1)and
(b)thetaxdeductibleatsourceundertheprovisionsofChapterXVIIBhasbeendeductedfromsuch
income.

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