Section 44DA of Income Tax Act for AY 2023-24

Section 44DA of Income Tax Act amended by Finance Act and Income-tax Rules. Computing income by way of royalties in case of non-residents.

Amended and updated notes on section 44DA of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Special provision for computing income by way of royalties, etc., in case of non-residents.

Chapter IV (Sections 14 to 59) of the Income Tax Act 1961 deals with the provisions related to computation of total income. Section 44DA of IT Act 1961-2022 provides for special provision for computing income by way of royalties, etc., in case of non-residents.

Recently, we have discussed in detail section 44D (special provisions for computing income by way of royalties, etc., in the case of foreign companies) of IT Act 1961. Today, we learn the provisions of section 44DA of Income-tax Act 1961. The amended provision of section 44DA is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 44DA of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.

Section-44DA: Special provision for computing income by way of royalties in case of non-residents

Section 44DA(1) of Income Tax Act

The income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by a non-resident (not being a company) or a foreign company with Government or the Indian concern after the 31st day of March, 2003, where such non-resident (not being a company) or a foreign company carries on business in India through a permanent establishment situated therein, or performs professional services from a fixed place of profession situated therein, 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, shall be computed under the head “Profits and gains of business or profession” in accordance with the provisions of this Act:

Provided that no deduction shall be allowed,—

  • (i) in respect of any expenditure or allowance which is not wholly and exclusively incurred for the business of such permanent establishment or fixed place of profession in India; or
  • (ii) in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to its head office or to any of its other offices :

Provided further that the provisions of section 44BB shall not apply in respect of the income referred to in this section.

Section 44DA(2) of Income Tax Act

Every non-resident (not being a company) or a foreign company shall keep and maintain books of account and other documents in accordance with the provisions contained in section 44AA and get his accounts audited by an accountant as defined in the Explanation below sub-section (2) of section 288 before the specified date referred to in section 44AB and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant.

[Sub-section (2) of section 44DA was amended w.e.f. 01.04.2020 by the Finance Act 2020]

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) “royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;
  • (c) “permanent establishment” shall have the same meaning as in clause (iiia) of section 92F.


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