TaxTMI 
TaxTMI 
Income deemed to accrue or arise in India
X X X X Extracts X X X X
X X X X Extracts X X X X
....a for the purpose of export ; ^3[****] ^4[(c) in the case of a non-resident, being a person engaged in the business of running a news agency or of publishing newspapers, magazines or journals, no income shall be deemed to accrue or arise in India to him through or from activities which are confined to the collection of news and views in India for transmission out of India;] ^5[(d) in the case of a non-resident, being- (1) an individual who is not a citizen of India ; or (2) a firm which does not have any partner who is a citizen of India or who is resident in India ; or (3) a company which does not have any shareholder who is a citizen of India or who is resident in India, no income shall be deemed to accrue or arise in India to such individual, firm or company through or from operations which are confined to the shooting of any cinematograph film in India.] ^23[(e) in the case of a foreign company engaged in the business of mining of diamonds, no income shall be deemed to accrue or arise in India to it through or from the activities which are confined to the display of uncut and unassorted diamond in any speci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce" for this purpose, shall mean- (a) transaction in respect of any goods, services or property carried out by a non-resident with any person in India including provision of download of data or software in India, if the aggregate of payments arising from such transaction or transactions during the previous year exceeds such amount as may be prescribed; or (b) systematic and continuous soliciting of business activities or engaging in interaction with such number of users in India, as may be prescribed: Provided that the transactions or activities shall constitute significant economic presence in India, whether or not- (i) the agreement for such transactions or activities is entered in India; or (ii) the non-resident has a residence or place of business in India; or (iii) the non-resident renders services in India: ^39[Provided further that the transactions or activities which are confined to the purchase of goods in India for the purpose of export shall not constitute significant economic presence in India:] ^40[Provided also] that only so much of income as is attributable to the transactions or activities ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch is held by a non-resident by way of investment, directly or indirectly, in Category-I or Category-II foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014 ^34[prior to their repeal], made under the Securities and Exchange Board of India Act,1992. (15 of 1992.)] ^35[Provided also that nothing contained in this Explanation shall apply to an asset or a capital asset, which is held by a non-resident by way of investment, directly or indirectly, in Category-I foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, made under the Securities and Exchange Board of India Act, 1992. (15 of 1992.);] ^37[Provided also that nothing contained in this Explanation shall apply to- (i) an assessment or reassessment to be made under section 143, section 144, section 147 or section 153A or section 153C; or (ii) an order to be passed enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154; or (iii) an order to be passed deeming a person to be an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise, he shall either withdraw or shall submit an undertaking to withdraw the claim, if any, in such proceedings or notice, in such form and manner as may be prescribed; (iii) the said person shall furnish an undertaking, in such form and manner as may be prescribed, waiving his right, whether direct or indirect, to seek or pursue any remedy or any claim in relation to the said income which may otherwise be available to him under any law for the time being in force, in equity, under any statute or under any agreement entered into by India with any country or territory outside India, whether for protection of investment or otherwise; and (iv) such other conditions as may be prescribed.] ^21[Explanation 6.-For the purposes of this clause, it is hereby declared that- (a) the share or interest, referred to in Explanation 5, shall be deemed to derive its value substantially from the assets (whether tangible or intangible) located in India, if, on the specified date, the value of such asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eferred to in the Explanation 5,- (i) if such company or entity directly owns the assets situated in India and the transferor (whether individually or along with its associated enterprises), at any time in the twelve months preceding the date of transfer, neither holds the right of management or control in relation to such company or entity, nor holds voting power or share capital or interest exceeding five per cent. of the total voting power or total share capital or total interest, as the case may be, of such company or entity; or (ii) if such company or entity indirectly owns the assets situated in India and the transferor (whether individually or along with its associated enterprises), at any time in the twelve months preceding the date of transfer, neither holds the right of management or control in relation to such company or entity, nor holds any right in, or in relation to, such company or entity which would entitle him to the right of management or control in the company or entity that directly owns the assets situated in India, nor holds such percentage of voting power or share capital or interest in such company or entity which results in holding of (ei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y interest payable by the permanent establishment in India of such non-resident to the head office or any permanent establishment or any other part of such non-resident outside India shall be deemed to accrue or arise in India and shall be chargeable to tax in addition to any income attributable to the permanent establishment in India and the permanent establishment in India shall be deemed to be a person separate and independent of the non-resident person of which it is a permanent establishment and the provisions of the Act relating to computation of total income, determination of tax and collection and recovery shall apply accordingly; (b) "permanent establishment" shall have the meaning assigned to it in clause (iiia) of section 92F;] (vi) income by way of royalty payable by- (a) the Government ; or (b) a person who is a resident, except where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India ; or (c) a person who is a non....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessment year) that the agreement may be regarded as an agreement made before the 1st day of April, 1976. Explanation 2.-For the purposes of this clause, "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains") for- (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ; (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property ; (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill ; ^12[(iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB;] (v) the transfer of all or any r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... purposes of making or earning any income from any source in India : ^15[Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976, and approved by the Central Government.] ^17[Explanation 1.-For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date.] Explanation ^16[2].-For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".] ^38[(viii) income arising outside India, being any sum of money referre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4-2004. 7. Substituted vide Section 5 of the Finance Act, 1999 w.e.f. 01-4-2000 before it was read as, "Explanation.-For the removal of doubts, it is hereby declared that income of the nature referred to in this clause payable for service rendered in India shall be regarded as income earned in India " Earlier, Inserted vide Section 4 of the Finance Act, 1983 w.e.f. 01-04-1979 8. Inserted vide Section 4 of the Finance Act, 1976 w.e.f. 01-06-1976 9. Inserted vide Section 4 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1991 10. Substituted vide Section 4 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1991 before it was read as, "foregoing proviso" 11. Substituted vide Section 2 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1988 before it was read as, "Income-tax Officer" 12. Inserted vide Section 4 of the Finance Act, 2001 w.e.f. 01-04-2002 13. Substituted vide Section 4 of the Finance Act, 2001 w.e.f. 01-04-2002 before it was read as, "sub-clauses (i) to (v)" 14. Substituted vide Sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 5 of the Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2022 before it was read as, "in the case of a business" 30. Omitted vide Section 5 of the Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2021 before it was read as, "^27[Explanation 2A.--For the removal of doubts, it is hereby clarified that the significant economic presence of a non-resident in India shall constitute "business connection" in India and "significant economic presence" for this purpose, shall mean-- (a) transaction in respect of any goods, services or property carried out by a non-resident in India including provision of download of data or software in India, if the aggregate of payments arising from such transaction or transactions during the previous year exceeds such amount as may be prescribed; or (b) systematic and continuous soliciting of business activities or engaging in interaction with such number of users as may be prescribed, in India through digital means: Provided that the transactions or activities shall constitute significant economic presence in India, whether or not,- (i) the agreement for such transactions or activitie....