Union Budget 2025-26 (Full) + Finance Bill, 2025

X. Scheme of presumptive taxation extended for non-resident providing services for electronics manufacturing facility

In order to position India as the global hub for Electronics System Design and Manufacturing, a comprehensive program for the development of semiconductors and display manufacturing ecosystem in India was approved by Government of India. Ministry of Electronics and Information Technology has notified Schemes for setting up of such facilities in India.

2. In this context, it has been represented that non-residents will be providing support in setting up of such electronics manufacturing facilities by deploying the technology and providing support services.

3. In order to ensure certainty and promotion of this industry, it is proposed to provide a presumptive taxation regime for non-residents engaged in the business of providing services or technology, to a resident company which are establishing or operating electronics manufacturing facility or a connected facility for manufacturing or producing electronic goods, article or thing in India, under a scheme notified by the Central Government in the Ministry of Electronics and Information Technology and satisfies such conditions as prescribed in the rules.

4. It is, therefore, proposed, to insert a new section 44BBD, which deems twenty-five per cent of the aggregate amount received/ receivable by, or paid/ payable to, the non-resident, on account of providing services or technology, as profits and gains of such non-resident from this business. This will result in an effective tax payable of less than 10% on gross receipts, by a non-resident company.

5. This amendment will take effect from the 1st day of April, 2026 and shall accordingly, apply in relation to the assessment year 2026-27 and subsequent assessment years.

[Clause 11]

 

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Full Text:

Union Budget 2025-26 (Full) + Finance Bill, 2025

Presumptive taxation for non-resident service providers to electronics manufacturing facilities creates a deemed profit basis, reducing effective tax. A presumptive taxation regime under proposed section 44BBD deems a fixed proportion of aggregate amounts received/receivable or paid/payable to non-residents for providing services or technology to resident companies establishing or operating electronics manufacturing or connected facilities under a Central Government notified scheme as profits and gains, simplifying tax treatment and lowering the effective tax on gross receipts, subject to prescribed conditions and rules.