TaxTMI 
TaxTMI 
TaxTMI 
Comparison of Section 9 "Income deemed to accrue or arise in India" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)
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....ia. It matters because it defines the taxable reach over non-residents and cross-border transactions; affected parties include non-resident persons, residents paying such incomes, eligible investment funds and their managers. Effective or decision date: Not stated in the document. Background & Scope Statutory hook: Clause 9 (Income deemed to accrue or arise in India) of the Income Tax Bill, 2025 (Old Version). Context: sets the basis of charge and source rules for determining when various types of income are to be treated as arising in India for tax purposes. Coverage includes income from assets/sources/property in India, business connections (including significant economic presence), salaries, dividends, interest, royalty, fees for techn....
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....to extend the charge to India over income connected with Indian assets, operations or significant economic engagement and to modernise source rules to include digital/economic presence (e.g., "significant economic presence", advertisements targeting Indian users, sale of data collected from Indian users). The clause signals an intention to capture income where economic value is derived from India even if legal formalities (agreement location, residency) are elsewhere. Interpretive principles indicated: inclusive language ("shall include") and detailed examples suggest an expansive source rule; cross-references to prescribed amounts and rules show reliance on subsidiary legislation to set thresholds. Exceptions/Provisos Carve-outs and cond....
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....ge.) * Example 2: A resident borrows funds and uses them entirely for a business conducted outside India; interest paid to the lender is excluded from being deemed to accrue/arise in India under the stated exception. (Directly from clause text.) * Example 3: A foreign company transfers shares of an overseas entity that derive substantial value from Indian assets (value above ten crore rupees and >=50% of entity assets on specified date); part of the transfer gain may be treated as arising in India unless exceptions (e.g., held by qualifying FPIs) apply. (Based on clause provisions.) Interplay Interactions with other provisions: cross-references to section 173(c) for "permanent establishment" meaning; reference to section 6(13) and sec....
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....parate clauses (a)-(c) including "payable for services rendered in India" and the rest/leave period clause and the Government-to-Indian-citizen clause. * Practical impact: The As Passed formulation emphasises "earned in India" as the primary hook and bundles related concepts into a conjunctive formulation; the practical taxation outcomes appear intended to be the same but the As Passed language may be used to argue a different interpretive starting point (i.e., focus on "earned"). * Definitions and clarifications for interest/PE: Both texts treat interest payable by Government/resident/non-resident similarly. The As Passed (5)(b) expands the treatment of interest payable by an Indian permanent establishment of a foreign bank, expressly ....
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....ibes that a SEP arises on certain transactions above "such amount as may be prescribed" and on "systematic and continuous soliciting ... with such number of users ... as may be prescribed." The Bill (old) uses similar wording but includes minor drafting differences (e.g., some cross-references, and the Bill's carve-outs/phrasing differ in punctuation and placement). * Practical impact: Substantively similar; SEP continues to expand source tax reach to digital/specified economic activity, and practical impact is that non-residents with sufficient payments or user engagement may now be taxed-administrative guidance (prescription of amount/number of users) will determine operational effect; both texts leave those critical thresholds to s....
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....itions in Schedule I. Both grant Central Government power to relax conditions for IFSC-located eligible fund managers commencing by 31 March 2030. * Expression "through": The As Passed includes an express definition in sub-section (13) that "through" includes "by means of", "in consequence of" or "by reason of". The Bill (old) places a similar definition in sub-section (13) but references it as applying to sub-section (2). * Practical impact: Minimal; explicit definitional clarity reduces interpretive disputes about "through". * Cross-reference and drafting differences: Several cross-references and section numbers (e.g., associated enterprises reference) differ. * Practical impact: Potential for interpretive differences where the ne....