Tax on dividends, royalty and technical service fees in the case of foreign companies

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....hased in foreign currency, of a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India, the income-tax payable shall be aggregate of- (A) the amount of income-tax calculated on the amount of income by way of dividends ^36[****], if any, included in the total income, at the rate of twenty per cent ; ^40[Provided that the amount of income-tax calculated on the amount of income by way of dividend received from a Unit in an International Financial Services Centre, as referred to in sub-section (1A) of section 80LA, shall be ten per cent.;] (B) the amount of income-tax calculated on the amount of income by way of interest referred to in sub-clause (ii), if any, included in the total income, at the rate of twenty per cent ; ^37[(BA) the amount of income-tax calculated on the amount of income by way of interest referred to in,- (i) sub-clause (iia), if any, included in the total income, at the rate of five per cent.; (ii) sub-clause (iiaa) or sub-clause (iiab) or sub-clause (iiac), if any, included in the total income, at the rate provided in the respective sections referred to in the said sub-cla....

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....Unit Trust of India Act, 1963 (52 of 1963).] ^10[(1A) Where the royalty referred to in clause (b) of sub-section (1) is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book to an Indian concern ^11[or in respect of any computer software to a person resident in India], the provisions of sub-section (1) shall apply in relation to such royalty as if the words ^12[^13[the agreement is approved by the Central Government or where it relates to a matter] included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy] occurring in the said clause had been omitted : Provided that such book is on a subject, the books on which are permitted, according to the Import Trade Control Policy of the Government of India for the period commencing from the 1st day of April, 1977, and ending with the 31st day of March, 1978, to be imported into India under an Open General Licence : ^14[Provided further that such computer software is permitted according to the Import Trade Control Policy of the Government of India for the time being in force to ....

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....and ^39[(b) the tax deductible at source under the provisions of Part B of Chapter XVII has been deducted from such income and the rate of such deduction is not less than the rate specified under clause (a) or, as the case may be, clause (b) of sub-section (1).]]     ******************* NOTES:- 1. Inserted vide Section 20 of the Finance Act, 1976 w.e.f. 01-06-1976 2. Substituted vide Section 32 of the Finance Act, 1994 w.e.f. 01-04-1995 before it was read as, "(1) Subject to the provisions of sub-sections (1A) and (2), where the total income of an assessee, being a foreign company, includes any income by way of- (a) dividends; or (aa) interest received from Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency; or (ab) income received in respect of units, purchased in foreign currency, of a Mutual Fund specified under clause (23D) of section 10; or (b) royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the In....

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....vide Section 50 of the Finance Act, 2003 w.e.f. 01-04-2004 Earlier, Inserted vide Section 32 of the Finance Act, 1997 w.e.f. 01-04-1998 And was Omitted vide Section 45 of the Finance Act, 2002 w.e.f. 01-04-2003 before it was read as, "other than dividends referred to in section 115-O" 4. Substituted vide Section 50 of the Finance Act, 2003 w.e.f. 01-04-2004 before it was read as, "a foreign company, includes any income by way of royalty or fees for technical services" 5. Substituted vide Section 32 of the Finance Act, 1997 w.e.f. 01-04-1998 before it was read as, "(A) the amount of income-tax calculated on the income by way of royalty, if any, included in the total income, at the rate of thirty per cent ; (B)  the amount of income-tax calculated on the income by way of fees for technical services, if any, included in the total income, at the rate of thirty per cent ; and" 6. Inserted vide Section 34 of the Finance Act, 2005 w.e.f. 01-04-2006 7. Inserted vide Section 34 of the Finance Act, 2005 w.e.f. 01-04-2006 8. Inserted vide Section 34 of the Finance Act, 2005&nb....

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...., at the rate of thirty per cent if such royalty is received in pursuance of an agreement made on or before the 31st day of May, 1997 and twenty per cent where such royalty is received in pursuance of an agreement made after the 31st day of May, 1997 ^6[but before the 1st day of June, 2005]; ^7[(AA) the amount of income-tax calculated on the income by way of royalty, if any, included in the total income, at the rate of ten per cent if such royalty is received in pursuance of an agreement made on or after the 1st day of June, 2005;] (B) the amount of income-tax calculated on the income by way of fees for technical services, if any, included in the total income, at the rate of thirty per cent if such fees for technical services are received in pursuance of an agreement made on or before the 31st day of May, 1997 and twenty per cent where such fees for technical services are received in pursuance of an agreement made after the 31st day of May, 1997 ^8[but before the 1st day of June, 2005] ; and] ^9[(BB) the amount of income-tax calculated on the income by way of fees for technical services, if any, included in the total income, at the rate of ten per cent if....