Deduction for technical knowhow payments permits partial tax deduction for Indian companies receiving royalties under approved agreements.

An Indian company may deduct forty per cent of income received as royalties, commission, fees or similar payments from persons carrying on business in India when such income is consideration for the provision of technical know how or connected services, provided the agreement was entered into on or after the commencement date and Central Government approval is applied for before the relevant assessment year cut off; the deduction is not available for income already qualifying for the alternative specified deduction.

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