Special provision for computation of income on presumptive basis in respect of certain business activities of certain non-residents
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 61(1) of Income Tax Act 2025
61(1) The provisions of sections 26 to 54, to the extent contrary to this section, shall not apply to the specified business mentioned in column B of the Table in sub-section (2).
Section 61(2) of Income Tax Act 2025
61(2) The profits and gains of any specified business as mentioned in column B of the Table below, carried on by a specified assessee as mentioned in column C of the said Table during a tax year, shall be computed in the manner specified in column D thereof, and charged to income-tax for the said tax year under the head “Profits and gains of business or profession”.
| Sl No. | Specified business | Specified assessee | Profits and gains of business or profession |
|---|---|---|---|
| A | B | C | D |
| 1 | Business of operation of ships, other than cruise ships referred to in Serial number 2. | Non-resident. | 7.5% of (A+B), where,–– A = sum on account of carriage of passenger, livestock, mail or goods shipped at any port in India, whether paid or payable, in or outside India, to the assessee or any other person on his behalf (including demurrage, handling or other similar charges); B = sum on account of carriage of passenger, livestock, mail or goods shipped at any port outside India, whether received or deemed to be received in India, by the assessee or any other person on his behalf (including demurrage, handling or other similar charges). |
| 2 | Business of operation of cruise ships (subject to the conditions as prescribed). | Non-resident. | 20% of (A+B), where,–– A = sum on account of carriage of passenger, paid or payable to the assessee or any other person on his behalf; B = sum on account of carriage of passenger received or deemed to be received by the assessee or any other person on his behalf. |
| 3 | Business of operation of aircraft. | Non-resident. | 5% of (A+B), where,–– A = sum on account of carriage of passenger, livestock, mail or goods from any place in India, paid or payable (in or outside India) to the assessee or any other person on his behalf; B = sum on account of carriage of passenger, livestock, mail or goods from any place outside India, received or deemed to be received in India, by the assessee or any other person on his behalf. |
| 4 | Business of civil construction or erection or testing or commissioning, of plant or machinery, in connection with a turnkey power project, approved by the Central Government. | Foreign company. | 10% of the amount towards such civil construction, erection, testing, or commissioning, paid or payable, to the assessee or to any other person on his behalf, whether in or outside India. |
| 5 | Business of providing services or facilities (including supply of plant and machinery on hire) for prospecting, extraction or production of mineral oils. | Non-resident person. | 10% of (A+B), where,–– A = sum on account of business of providing services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils in India, paid or payable (in or outside India), to the assessee or any other person on his behalf; B = sum on account of business of providing services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils outside India, received or deemed to be received in India, by the assessee or any other person on his behalf. |
| 6 | Business of providing services or technology in India, for the purposes of setting up an electronics manufacturing facility or in connection with manufacturing or producing electronic goods, article or thing in India to a resident company. | Non-resident. | 25% of (A+B), where,–– A = the amount paid or payable to the non-resident assessee or to any person on his behalf on account of providing services or technology; B = the amount received or deemed to be received by the non-resident assessee or on behalf of non-resident assessee on account of providing services or technology. |
Section 61(3) of Income Tax Act 2025
61(3) For the purposes of (Table: Sl. Nos. 1 to 5) of sub-section (2), the specified assessee may claim that the profits actually earned from the specified business are lower than the business profits computed under sub-section (2), if,––
- (a) he keeps and maintains such books of account and other documents as required under section 62; and
- (b) gets his accounts audited and furnish a report of such audit as required under section 63.
Section 61(4) of Income Tax Act 2025
61(4) Any loss, allowance or deduction allowable under the provisions of this Act shall not be allowed against the income computed in the manner specified in sub-section (2).
Section 61(5) of Income Tax Act 2025
61(5) The written down value of any asset used for the purposes of specified business or profession shall be computed, as if the assessee mentioned in column C of the Table in sub-section (2) had claimed and was actually allowed depreciation thereon for each of the relevant tax years.
Section 61(6) of Income Tax Act 2025
61(6) For the purposes of sub-section (2) (Table: Sl. No. 5) the provisions of this section shall not apply where the provisions of section 54 or 59 or 207 or 527 apply for the purposes of computing profits and gains or any other income referred to in the said sections.
Section 61(7) of Income Tax Act 2025
61(7) In this section, “plant” includes ships, aircrafts, vehicles, drilling units, scientific apparatuses and equipments, used for the purposes of the specified business as mentioned in sub-section (2) (Table: Sl. No. 5).
Section 61(8) of Income Tax Act 2025
61(8) For the purposes of sub-section (2) (Table: Sl. No. 6), resident company shall satisfy the following:—
- (a) it is 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
- (b) it satisfies the conditions prescribed in this behalf.
FAQs on Section 61 of Income Tax Act 2025
1. What is Section 61 of the Income Tax Act, 2025?
Section 61 provides a special presumptive taxation scheme for computing profits and gains of certain specified businesses carried out by non-residents and foreign companies, replacing the general computation provisions under sections 26 to 54 where applicable.
2. Who can opt for presumptive taxation under Section 61?
Non-residents and foreign companies engaged in specified businesses as listed in the table under Section 61(2).
3. Which businesses are covered under Section 61(2)?
Six specified businesses including:
- Operation of ships (excluding cruise ships)
- Operation of cruise ships
- Operation of aircraft
- Turnkey power project construction
- Services related to mineral oil exploration
- Services or technology for electronics manufacturing in India
4. How are profits computed under this section?
Profits are computed on a presumptive basis as a fixed percentage of the total amounts received or receivable, as specified in the table for each business.
5. What is the presumptive rate for ship operations (other than cruise ships)?
7.5% of the total amount (A + B), where A and B refer to sums from carriage of goods, passengers, etc., in India and outside India respectively.
6. What is the presumptive rate for cruise ship operations?
20% of the total amount (A + B) from carriage of passengers.
7. What is the presumptive rate for aircraft operations?
5% of the total amount (A + B) from carriage of passengers, livestock, mail, or goods.
8. What is the presumptive rate for turnkey power project services?
10% of the amount related to civil construction, erection, testing, or commissioning.
9. What is the presumptive rate for mineral oil services?
10% of the total amount (A + B) for services or plant/machinery hire related to mineral oil prospecting or extraction.
10. What is the presumptive rate for electronics manufacturing support services?
25% of the total amount (A + B) for providing services or technology in India.
11. Can a non-resident claim lower actual profits under this scheme?
Yes, but only for businesses listed under serial numbers 1 to 5, and subject to maintenance of books and audit as per sections 62 and 63.
12. Are deductions or allowances allowed under this section?
No, any loss, allowance, or deduction under other provisions is not allowed against the presumptive income computed under Section 61(2).
13. How is depreciation treated under this section?
Written down value of assets will be computed as if depreciation was claimed and allowed for the relevant years.
14. Are there any exceptions to applying this section?
Yes, for businesses under Sl. No. 5, this section doesn’t apply if Sections 54, 59, 207, or 527 apply.
15. What does “plant” include in the context of mineral oil services?
“Plant” includes ships, aircrafts, vehicles, drilling units, scientific apparatus, and equipment used in the specified business.
16. What are the conditions for resident companies availing services under Sl. No. 6?
They must be operating electronics manufacturing facilities under a scheme notified by the Ministry of Electronics and IT, and fulfill prescribed conditions.
17. Is the presumptive income computed under this section final?
Yes, unless the assessee claims lower actual income and meets audit and record-keeping requirements for Sl. Nos. 1 to 5.
18. Can a non-resident assessee opt out of this scheme?
Yes, by declaring lower actual profits and fulfilling audit requirements. However, for Sl. No. 6, the provision is mandatory if conditions are met.
19. Is filing of books of accounts and audit report necessary under this section?
Only if the assessee wants to declare profits lower than presumptive income for businesses under Sl. Nos. 1 to 5.
20. When does Section 61 come into effect?
From the Tax Year starting on 1st April, 2026 (i.e., FY 2026–27).
