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What is Tax on dividends, royalty and technical service fees in the case of foreign companies? Section 115A of Income Tax Act 1961

Tax on dividends, royalty and technical service fees in the case of foreign companies is defined under sections 115A of Income Tax Act 1961. Provisions under this Section is :

Section 115A of Income Tax Act "Tax on dividends, royalty and technical service fees in the case of foreign companies"

Section 115A. (1) Where the total income of-
(a) a non-resident (not being a company) or of a foreign company, includes any income by way of-
(i) dividends other than dividends referred to in section 115-O; or
(ii) interest received from Government or an Indian concern on monies borrowed or debt incurred by Government or the Indian concern in foreign currency not being interest of the nature referred to in sub-clause (iia) or sub-clause (iiaa); or
(iia) interest received from an infrastructure debt fund referred to in clause (47) of section 10; or
(iiaa) interest of the nature and extent referred to in section 194LC; or
66[(iiab) interest of the nature and extent referred to in section 194LD; or]
67[(iiac) distributed income being interest referred to in sub-section (2) of section 194LBA;]

(iii) income received in respect of units, purchased 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 other than dividends referred to in section 115-O, if any, included in the total income, at the rate of twenty 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 ;
(BA) the amount of income-tax calculated on the amount of income by way of interest referred to in sub-clause (iia) or sub-clause (iiaa) 68[or sub-clause (iiab)] 69[or sub-clause (iiac)], if any, included in the total income, at the rate of five per cent;

 

(C) the amount of income-tax calculated on the income in respect of units referred to in sub-clause (iii), if any, included in the total income, at the rate of twenty per cent ; and
(D) the amount of income-tax with which he or it would have been chargeable had his or its total income been reduced by the amount of income referred to in sub-clause (i), sub-clause (ii), sub-clause (iia), sub-clause (iiaa) 68[, sub-clause (iiab)] 69[, sub-clause (iiac)] and sub-clause (iii) ;
(b) a non-resident (not being a company) or a foreign company, includes any income by way of royalty or fees for technical services other than income referred to in sub-section (1) of section 44DA received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976, and where such agreement is with an Indian concern, 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, then, subject to the provisions of sub-sections (1A) and (2), the income-tax payable shall be the aggregate of,-
70[(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 71[twenty-five] 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 71a[twenty-five] per cent; and]
(C) the amount of income-tax with which it would have been chargeable had its total income been reduced by the amount of income by way of royalty and fees for technical services.
Explanation.-For the purposes of this section,-
(a) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 ;
(b) "foreign currency" shall have the same meaning as in the Explanation below item (g) of sub-clause (iv) of clause (15) of section 10 ;
(c) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9 ;
(d) "Unit Trust of India" means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963).
(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 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 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 :
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 be imported into India under an Open General Licence.
Explanation 1.-In this sub-section, "Open General Licence" means an Open General Licence issued by the Central Government in pursuance of the Imports (Control) Order, 1955.
Explanation 2.-In this sub-section, the expression "computer software" shall have the meaning assigned to it in clause (b) of the Explanation to section 80HHE.
(2) Nothing contained in sub-section (1) shall apply in relation to any income by way of royalty received by a foreign company from an Indian concern in pursuance of an agreement made by it with the Indian concern after the 31st day of March, 1976, if such agreement is deemed, for the purposes of the first proviso to clause (vi) of sub-section (1) of section 9, to have been made before the 1st day of April, 1976; and the provisions of the annual Finance Act for calculating, charging, deducting or computing income-tax shall apply in relation to such income as if such income had been received in pursuance of an agreement made before the 1st day of April, 1976.
(3) No deduction in respect of any expenditure or allowance shall be allowed to the assessee under sections 28 to 44C and section 57 in computing his or its income referred to in sub-section (1).
(4) Where in the case of an assessee referred to in sub-section (1),-
(a) the gross total income consists only of the income referred to in clause (a) of that sub-section, no deduction shall be allowed to him or it under Chapter VI-A;
(b) the gross total income includes any income referred to in clause (a) of that sub-section, the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed as if the gross total income as so reduced were the gross total income of the assessee.
(5) It shall not be necessary for an assessee referred to in sub-section (1) to furnish under sub-section (1) of section 139 a return of his or its income if-
(a) his or its total income in respect of which he or it is assessable under this Act during the previous year consisted only of income referred to in clause (a) of sub-section (1); and
(b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.

   
 

Income Tax Act 1961

What is Tax in the case of block assessment of search cases? What is the meaning of Chapter not to apply if the assessee so chooses? Section 113 and 115 i of Income Tax Act 1961

What is Tax on distributed profits of domestic companies? Section 115 O of Income Tax Act 1961

What is Tax on dividends, royalty and technical service fees in the case of foreign companies? Section 115A of Income Tax Act 1961

What is Tax on income from units purchased in foreign currency or capital gains arising from their transfer? Section 115AB of Income Tax Act 1961

What is Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer? Section 115AC of Income Tax Act 1961

What is Tax on income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer? Section 115ACA of Income Tax Act 1961

What is Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer? Section 115AD of Income Tax Act 1961

What is Tax on profits and gains of life insurance business? What is Tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever? Section 115B and 115BB of Income Tax Act 1961

What is Tax on non-resident sportsmen or sports associations? What is Tax on income from units of an open-ended equity oriented fund of the Unit Trust of India or of Mutual Funds? Section 115BBA and 115BBB of Income Tax Act 1961

What is Tax on non-resident sportsmen or sports associations? What is Tax on income from units of an open-ended equity oriented fund of the Unit Trust of India or of Mutual Funds? Section 115BBA and 115BBB of Income Tax Act 1961

What is the meaning of Anonymous donations to be taxed in certain cases? What is Tax on certain dividends received from foreign companies? Section 115BBC and 115BBD of Income Tax Act 1961

What is Tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D? Section 115BBE of Income Tax Act 1961

 

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