Section 44BBD of Income Tax Act: Presumptive Taxation for Non-Residents

In Budget 2025, Finance Minister Nirmala Sitharaman proposed inserting a new provision for the computation of the profits or gains of non-residents engaged in providing services or technology related to electronics manufacturing in India. It has been introduced to enhance the electronics manufacturing sector and position India as a global hub for Electronics System Design and Manufacturing. In this article, we will provide a detailed overview of the newly introduced Section 44BBD of the Income-tax Act, 1961 (Act).

What is Presumptive Taxation?

Presumptive taxation is a system where the government assumes a fixed percentage of your turnover or gross receipts as your taxable income, regardless of the actual expenses incurred. 

What is Section 44BBD of the Income Tax Act?

Section 44BBD of the Income Tax Act provides a presumptive taxation scheme for non-residents engaged in providing services or technology for setting up an electronics manufacturing facility or in connection with manufacturing or producing electronic goods, articles or things in India.  

Who is Eligible to Opt for the Presumptive Scheme Under Section 44BBD of the Act?

Non-residents engaged in providing services or technology to a resident company setting up or operating an electronics manufacturing facility in India. The resident company must be operating under the scheme notified by the Ministry of Electronics and Information Technology (MeitY) and fulfilling the prescribed conditions. 

How is Presumptive Income Calculated under section 44BBD?

The presumptive income is calculated at 25% of the aggregate gross receipts which means that 25% of the aggregate gross receipts will be deemed as taxable profits.

The aggregate gross receipts shall consist of the following:

• The amount paid or payable to the non-resident or to any person on his behalf.
• The amount received or deemed to be received by the non-resident or on behalf of the non-resident. 

for providing services or technology in India.

What are the Restrictions if you Opt for the Presumptive Scheme?

If a non-resident opts for the presumptive taxation scheme under Section 44BBD, they will not be able to set off unabsorbed depreciation under Section 32 or brought forward losses under Section 72.

When will the Presumptive Taxation under Section 44BBD be Applicable?

The presumptive taxation scheme will be applicable with effect from 1 April 2026. This means that eligible taxpayers will be able to avail of this simplified method of taxation from 1 April 2026, i.e., from FY 2026-27.

Related Articles:
1. Section 44ADA – Presumptive Tax Scheme for Professionals
2. Section 44AD - Presumptive Scheme for Businesses