24 Feb 2025
Partners: Himanshu Sinha and Aditi Goyal, Senior Associate: Aishwarya Palan
The Finance Bill, 2025 introduces a new section (44BBD) in the Income Tax Act, 1961, offering a presumptive tax regime for non-residents providing technology and services to Indian companies setting up electronics manufacturing facilities in India. The provision is to apply financial year 2025-26 onwards and seeks to support India’s growing electronics sector and accelerate economic growth.
The presumptive regime will apply to non-residents engaged in the business of providing services or technology to a resident company establishing or operating an electronics manufacturing facility in India, or a connected facility for manufacturing or producing electronic goods, articles or things under a scheme notified by the Ministry of Electronics and Information Technology. Subject to the fulfilment of prescribed conditions, 25% of such non-residents’ gross receipts from providing services or technology will be treated as business income and taxed in India. This would result in an effective tax rate of under 10% on gross receipts, which is lower than the rates for royalty income and fees for technical services under India’s tax treaties. No set-off of unabsorbed depreciation or brought forward loss will be allowed against presumptive business income.
This is a positive move for the electronics manufacturing industry, but it also raises a few questions. For example, the terms ‘service’ and ‘technology’ are not clearly defined, which could lead to confusion or disputes. Additionally, it is unclear how the tax regime will apply if a non-resident has multiple streams of income from the facility in India – particularly where one stream of income has a lower effective tax rate under the presumptive regime, and the other stream of income is taxed more favourably under the treaty provisions.
Overall, while this proposal has the potential to boost high-tech manufacturing in India, further clarification from the government would help resolve these ambiguities and ensure smooth implementation.
If you require any further information about the material contained in this newsletter, please get in touch with your Trilegal relationship partner or send an email to alerts@trilegal.com. The contents of this newsletter are intended for informational purposes only and are not in the nature of a legal opinion. Readers are encouraged to seek legal counsel prior to acting upon any of the information provided herein.
Removal of the mandatory probate requirement under the Indian Succession Act
22 Dec 2025
Environment Law Monthly Updates –November 2025
09 Dec 2025
OECD 2025 update: Guidance on permanent establishment risks in cross-border remote work arrangements
08 Dec 2025If you would like to receive content directly in your inbox from our knowledge repository, please complete this subscription form. This service is reserved for clients and eligible contacts.
Under the rules of the Bar Council of India, Trilegal is prohibited from soliciting work or advertising in any form or manner. By accessing this website, www.trilegal.com, you acknowledge that:
We prioritize your privacy. Before proceeding, we encourage you to read our privacy policy, which outlines the below, and terms of use to understand how we handle your data:
For more information, please read our terms of use and our privacy policy.
