Income Deemed to Accrue or Arise in India: A Comparative Analysis of Current and Proposed Provisions Clause 9 Income deemed to accrue or arise in India. - Income Tax Bill, 2025

Clause 9 Income deemed to accrue or arise in India. Income Tax Bill, 2025 1. Introduction This analysis examines the proposed changes in Clause 9 of the Income Tax Bill, 2025 , compared to the existing provisions u/ss 9 and 9A of the Income-tax Act, 1961 . The provisions deal with income deemed to accrue or arise in India and have significant implications for both residents and non-residents. 2. Objective and Purpose The primary objectives of these provisions are: To define the territorial nexus for taxing income in India To establish clear criteria for business connection in India To regulate international transactions and prevent tax avoidance To provide clarity on taxation of digital economy transactions 3. Key Changes and Analysis 3.1 Structural Changes The proposed Bill reorganizes the provisions into more systematic sub-sections (1) to (10) Enhanced clarity in the classification of different types of income More detailed explanations for various concepts 3.2 Business Connection Current Provisions: Defined through Explanation 2 in Section 9 Includes traditional business presence concepts Proposed Changes: Expanded definition under sub-section (8) Specific inclusion of significant economic presence Detailed provisions for digital economy transactions 3.3 Digital Economy Provisions New Additions: Comprehensive framework for digital transactions Specific provisions for: Online advertising targeting Indian customers Data collection and monetization Digital services 3.4 Investment Fund Management Integration of Section 9A provisions Modified conditions for eligible investment funds Enhanced clarity on fund manager activities 4. Practical Implications 4.1 For Businesses Need to reassess digital presence in India Review of existing business structures Compliance requirements for digital transactions 4.2 For Non-residents Enhanced scope of taxable income New obligations for digital operations Modified criteria for permanent establishment 4.3 For Fund Managers Revised operational guidelines Modified eligibility criteria New compliance requirements 5. Comparative Analysis 5.1 International Perspective Alignment with OECD BEPS guidelines Compatibility with international tax treaties Modern approach to digital economy taxation 5.2 Domestic Law Integration Harmony with other provisions of Income Tax Act Coordination with foreign exchange regulations Integration with digital commerce laws 6. Conclusion The proposed changes represent a significant modernization of India s international taxation framework, particularly in addressing digital economy challenges while maintaining traditional concepts of business connection. Full Text : Clause 9 Income deemed to accrue or arise in India.