Comparison of Section 61 "Special provision for computation of income on presumptive basis in respect of certain business activities of certain non-residents" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....mputing profits and gains of certain specified businesses carried on by non-residents. It matters because it fixes taxable income for designated activities (shipping, aircraft, cruise ships, turnkey power construction, mineral oil services, and certain electronics-manufacturing services) at specified percentages of receipts. Affected parties include non-resident taxpayers and, in one entry, foreign companies and resident companies (as recipients). Effective/decision date: Not stated in the document. Background & Scope Statutory hook: Clause 61 of the Income Tax Bill, 2025 (Old Version). The clause creates a special presumptive computation method for profits and gains from specified business activities, overriding sections 26-54 "to the ex....

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.... B as receipts/amounts either paid/payable (in or outside India) or received/deemed to be received in India depending on the activity; inclusive examples such as demurrage, handling charges are specified for shipping. Interpretation The clause creates a deeming/presumptive mechanism: the specified percentage of the defined receipts "shall be computed ... and charged to income-tax" under the head "Profits and gains of business or profession." Legislative intent, as indicated by the text, is to provide a simplified, predictable taxation basis for specified cross-border activities often difficult to tax under conventional computation rules. The Bill contemplates that, despite sections 26-54 normally governing computation, this clause will go....

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....se 61 are 7.5% of (A+B) and no further deductions/losses can be set off against this amount. (No numerical data provided in the document.) * Example 2 (turnkey power foreign company): A foreign company receives amounts for erection/testing under an approved turnkey power project. Taxable income is 10% of the amounts paid/payable to the company for such services. The company may, if it maintains books and audits (per s.62/63), claim actual profits lower than 10% (subject to subsection (3)). Interplay The clause expressly displaces sections 26-54 to the extent inconsistent, thereby altering the usual rules for income computation for the listed activities. It cross-refers to sections 62 and 63 (bookkeeping and audit) as preconditions for....

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....isk for those taxpayers. * Definition/wording of "plant" (subsection (7)/(7) in Bill): Bill states "In this section, 'plant' includes ... used for the purposes of the specified business as mentioned in sub-section (2) (Table: Sl. No. 5)." Act states "For the purposes of sub-section (2) (Table: Sl. No. 5) 'plant' includes ..." * Practical impact: The Act confines the definition explicitly for s.61(2) Sl. No.5 purposes, aligning the scope; the Bill's broader phrase "In this section" could potentially have been read to apply the list more widely. The Act therefore narrows or clarifies the application of the definition. * Subsection (6) phraseology and numbering: Both refer to exclusions where sections 54, 59, 207 or 5....

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....pplication and clarifies legislative intent. Practical Implications * Compliance and risk areas: Taxpayers carrying on the listed activities must compute taxable profits using the fixed percentages for the defined receipts. For Sl. Nos.1-5, taxpayers can contest the presumptive amount by maintaining books and obtaining an audit (s.62/63). For Sl. No.6, the requirement that the resident company operates under a notified MeitY scheme and prescribed conditions must be satisfied, else the presumptive rate may not apply. Failure to maintain the requisite books/audit where a taxpayer wishes to claim lower actual profits will foreclose that avenue. * Record-keeping/evidence: Where a taxpayer intends to claim actual profits lower than the pres....