Income Tax Act

Official PDF pages 106–110

SOURCE PDF PAGE 106
( a )   the profits or gains actually earned from the specified business or
profession are lower than the profits or gains computed in the manner
mentioned in column E of the said Table; and
( b )   whose total income exceeds the maximum amount which is not charge -
able to tax,
shall be required to—
( i )   keep and maintain such books of account and other documents as
required under section 62; and
( ii )   get the accounts audited and furnish a report of such audit as required
under section 63.
(4) Any loss, allowance or deduction allowable under the provisions of this Act,
shall not be allowed against the income computed in the manner specified in
sub-section (2).
(5) For the purposes of sub-section (2) (Table: Sl. No. 2), where the assessee is a
firm, the salary and interest paid to its partners shall be deducted from the income
computed under sub-section (1) subject to the conditions and limits specified in
section 35( e ).
(6) The written down value of any asset used for the purposes of specified business
or profession shall be computed as if the assessee mentioned in column C of the
Table in sub-section (2) had claimed and was actually allowed deduction in respect
of depreciation thereon for each of the relevant tax years.
(7) Where an eligible assessee declares profit for any tax year as per the provisions
of sub-section (2) (Table: Sl. No. 1) and he declares profit for any of the five tax
years succeeding such tax year in contravention of the provisions of sub-section (1),
then he shall not be eligible to claim the benefit of the provisions of this section for
five tax years subsequent to the tax year in which the profit has not been declared
as per the provisions of the said sub-section.
(8) Irrespective of anything contained in foregoing provision of this section, where
provisions of sub-section (7) are applicable to an eligible assessee and his total in -
come exceeds the maximum amount which is not chargeable to income-tax, he shall
be required to keep and maintain such books of account and other documents as
required under section 62 and get them audited and furnish a report of such audit
as required under section 63.
(9) For the purposes of sub-section (2) (Table: Sl. Nos. 1 and 3), the receipt of amount
or aggregate of amounts by a cheque drawn on a bank or by a bank draft, which is
not account payee, shall be deemed to be the receipt in cash.
(10) The provisions of sections 62 and 63 shall not apply in so far as they relate to
the business referred to in sub-section (2) (Table: Sl. No. 2) and in computing the
monetary limits under those sections, the gross receipts or, as the case may be, the
income from the said business shall be excluded.
(11) For the purposes of this section,—
( a )   “eligible assessee” means an individual, a Hindu undivided family, or
a firm other than a limited liability partnership, who is resident in
India, and who—

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( i )  
8
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( ii )   has not claimed any deduction under Chapter VIII-C for the
relevant tax year;
( iii )   does not carry on specified profession as defined in section 62(4);
( iv )   does not earn any income in the nature of commission or broke-
rage;
( v )   does not carry on any agency business;
( b )   “specified assessee” means an individual or a firm, other than a limited
liability partnership, who is a resident in India;
( c )   “limited liability partnership” shall have the same meaning as assigned
to it in section 2(1)( n ) of the Limited Liability Partnership Act, 2008
(6 of 2009);
( d )   the expressions “goods carriage”, “gross vehicle weight” and “unladen
weight” shall have the same meaning as respectively assigned to them
in section 2 of the Motor Vehicles Act, 1988 (59 of 1988);
( e )   “heavy goods vehicle” means any goods carriage, the gross vehicle weight
of which exceeds 12,000 kilograms; and
( f )   an assessee, who is in possession of a goods carriage, whether taken on
hire purchase or on instalments and for which the whole or part of the
amount payable is still due, shall be deemed to be the owner of such
goods carriage.
Computation of royalty and fee for technical services in hands of non-
residents.
59.   (1) Income in the nature of royalty or fees for technical services received
by a specified assessee during a tax year, shall be computed under the
head “Profits and gains of business or profession” under this Act, if the following
conditions are satisfied:—
( a )   income is received from the Government or an Indian concern;
( b )   income is in pursuance to an agreement made by the specified assessee
with the Government or the Indian concern;
( c )   the specified assessee carries on business in India through a permanent
establishment, or performs professional services from a fixed place of
profession, situated in India; and
( d )   the right, property or contract in respect of which the royalties or fees for
technical services are paid is effectively connected with such permanent
establishment or fixed place of profession.
(2) No deduction shall be allowed against the income computed under sub-section
(1) in respect of the following amounts:—
8.   Omitted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its omission, sub-clause ( i ) read
as under :
“( i )   has not claimed any deduction under section 144;”

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( a )   any expenditure or allowance which is not wholly and exclusively
incurred for the business of such permanent establishment or fixed
place of profession in India; or
( b )   amounts, if any, paid (otherwise than towards reimbursement of actual
expenses) by the permanent establishment to its head office or to any of
its other offices.
(3) The provisions of section 61 in so far as it relates to business referred to in
section 61(2) (Table: Sl. No. 5), shall not apply in respect of the income referred to
in this section.
(4) The specified assessee shall keep and maintain books of account and other
documents as per the provisions of section 62, get his accounts audited on or before
the specified date referred to in section 63 by an accountant, and furnish report of
audit in the prescribed form, duly signed and verified by the accountant.
(5) For the purposes of this section, the expression “specified assessee” means a
non-resident (not being a company) or a foreign company.
Deduction of head office expenditure in case of non-residents.
60.   (1) Irrespective of anything to the contrary contained in sections 26 to 54, in
the case of a non-resident assessee, deduction of head office expenditure
incurred by such assessee as is attributable to his business or profession in India,
shall be allowed in computing the income chargeable under the head “Profits and
gains of business or profession” subject to provisions of sub-section (2).
(2) The deduction allowable under sub-section (1) shall be restricted—
( a )   if the adjusted total income of the assessee is a loss, to an upper monetary
limit of 5% of the average adjusted total income of the assessee; or
( b )   in any other case, to an upper monetary limit of 5% of the adjusted total
income of the assessee.
(3) For the purposes of this section,—
( a )   “adjusted total income” means the total income computed under this
Act, without giving effect to the allowance referred to in this section
or in section 33(11) or the deduction referred to in section 32( i )( A ) or
any loss carried forward under section 111(1) or 112(1) or 113(2) or
115(2) or the deductions under Chapter VIII;
( b )   “average adjusted total income” means,—
( i )   if the assessee is assessable for each of the three tax years imme -
diately preceding the relevant tax year, the arithmetic mean of his
adjusted total income over those three tax years;
( ii )   if the assessee is assessable only for two of the said three tax years,
the arithmetic mean of his adjusted total income over those two
tax years;
( iii )   if the assessee is assessable only for one of the said three tax years,
his adjusted total income for that tax year;
( c )   “head office expenditure” means executive and general administration
expenditure incurred by the assessee outside India, including expendi-
ture incurred in respect of—

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( i )   rent, rates, taxes, repairs or insurance of any premises outside India
used for the business or profession;
( ii )   salary, wages, annuity, pension, fees, bonus, commission, gratuity,
perquisites or profits   in lieu   of, or in addition to, salary, whether
paid or allowed to any employee or other person employed in, or
managing the affairs of, any office outside India;
( iii )   travelling by any employee or other person employed in, or man -
aging the affairs of, any office outside India; and
( iv )   such other matters connected with executive and general admin -
istration, as may be prescribed.
Special provision for computation of income on presumptive basis in respect
of certain business activities of certain non-residents.
61.   (1) The provisions of sections 26 to 54, to the extent contrary to this section,
shall not apply to the manner of computation of profits and gains of the
specified business in sub-section (2).
(2) The profits and gains of any specified business as mentioned in column B of
the Table below, carried on by a specified assessee as mentioned in column C of the
said Table during a tax year, shall be computed in the manner specified in column
D thereof, and shall be deemed to be the profits and gains of such business of such
assessee chargeable to tax for the said tax year under the head “Profits and gains
of business or profession”.
TABLE
Sl
No.
Specified business   Specified
assessee
Profits and gains of business or
profession
A   B   C   D
1.   Business of opera-
tion of ships, other
than   cruise   ships
referred to in Serial
number 2.
Non-
resident.
7.5% of (A+B),
where,—
A = sum on account of carriage of
passengers, livestock, mail or goods
shipped at any port in India, whether
paid or payable, in or outside India, to
the assessee or any other person on his
behalf (including demurrage, handling
or other similar charges);
B = sum on account of carriage of
passengers, livestock, mail or goods
shipped   at   any   port   outside   India,
whether   received   or   deemed   to   be
received in India, by the assessee or any
other person on his behalf (including
demurrage, handling or other similar
charges).

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SOURCE PDF PAGE 110
Sl
No.
Specified business   Specified
assessee
Profits and gains of business or
profession
A   B   C   D
2.   Business of opera -
tion of cruise ships
(subject to the con -
ditions as may be
prescribed).
Non-
resident.
20% of (A+B),
where,—
A = sum on account of carriage of
passengers,   paid   or   payable   to   the
assessee or any other person on his
behalf;
B = sum on account of carriage of
passengers received or deemed to be
received by the assessee or any other
person on his behalf.
3.   Business of opera-
tion of aircraft.
Non-
resident.
5% of (A+B),
where,—
A = sum on account of carriage of
passengers, livestock, mail or goods from
any place in India, paid or payable (in
or outside India) to the assessee or any
other person on his behalf;
B = sum on account of carriage of
passengers, livestock, mail or goods
from any place outside India, received
or deemed to be received in India, by
the assessee or any other person on his
behalf.
4.   Business   of   civil
construction or erec -
tion   or   testing   or
commissioning,   of
plant or machinery,
in connection with a
turnkey power proj -
ect, approved by the
Central   Government.
Foreign
company.
10% of the amount towards such civil
construction,   erection,   testing,   or
commissioning, paid or payable, to the
assessee or to any other person on his
behalf, whether in or outside India.
5 .   Business   of   pro -
viding   services   or
facilities   (includ -
ing   supply of plant
and machinery on
hire) for prospect -
ing,   extraction   or
Non-
resident.
10% of (A+B),
where,—
A = sum on account of business of
providing   services   and   facilities   in
connection with, or supply of plant and
machinery on hire used, or to be used,