Special Provisions for Computing Income by Way of Royalties, etc., in case of Non-Residents and Foreign Companies – Section 44DA - International Taxation - Income Tax

Special Provisions for Computing Income by Way of Royalties, etc., in case of Non-Residents and Foreign Companies Section 44DA Eligible Assessee Section 44DA provides that income by way of royalty or fees for technical services received by non-residents and foreign companies from the Govt. or an Indian concern, will be computed on a net income basis i.e. after allowing all expenses under the chapter of PGBP and taxed at the regular tax rate, where such non-resident carries on business in India through a permanent establishment or performs professional services from a fixed place of profession in India, and the right, property, or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed place of profession, as the case may be. The word permanent establishment includes a fixed place of business through which the business of the enterprise is wholly or partly carried on. Section 44DA also provides that, with respect to the above-stated income, no deduction shall be allowed in respect of Expenses not allowed as deduction While computing the income chargeable to tax under this section, the following expenses are not allowed as deduction: any expenditure or allowance which is not wholly or exclusively incurred for the business of such permanent establishment or fixed place of profession in India; and amounts paid by the permanent establishment to the head office or to any of its other offices except reimbursement of actual expenses. Note: - If the income is taxable u/s 44DA, deduction under VI-A, if any, shall be allowed. The provision of section 44BB do not apply in respect of income covered by this section