Scheme of presumptive taxation extended for non-resident providing services for electronics
manufacturing facility
The Finance Bill, 2025, proposes several key changes in the Income Tax Act, 1961, to continue reforms in the direct tax system through tax reliefs, removing difficulties faced by taxpayers, and rationalizing1 various provisions. Here are some of the key changes:
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.