The Indian government has introduced an amendment to the proposed Section 44BBD of the Income-tax Act, 1961, through the Finance Bill, 2025, bringing greater clarity to the presumptive taxation scheme for non-resident technology and service providers catering to India’s electronics manufacturing sector.
Understanding Section 44BBD of the Income-tax Act, 1961
Section 44BBD, as initially proposed, establishes a presumptive taxation regime for non-residents engaged in the business of providing technology and services to resident companies operating electronic manufacturing facilities in India. Under this provision, 25% of the aggregate payments received or receivable by a non-resident for such technology or services shall be deemed as taxable business profits in India. This move aims to simplify tax compliance for foreign entities contributing to India’s electronics manufacturing ecosystem.
Key Amendment to Section 44BBD in Finance Bill, 2025
In a recent government amendment, the Finance Bill, 2025, now explicitly states that income taxed under Section 44BBD will not be subject to additional taxation under Section 44DA or Section 115A. This amendment ensures that concerns regarding the concurrent application of taxation rules on permanent establishments, royalties, and fees for technical services are effectively addressed.
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