Rule 9 of the Draft Income-tax Rules, 2026 provides a mechanism for determining the taxable income of non-residents where the exact amount accruing or arising in India cannot be definitely ascertained. If the Assessing Officer is of the opinion that income derived directly or indirectly through any asset, property, source of income, or business connection in India cannot be precisely determined, the income may be computed on a reasonable basis. The Officer may calculate it as a percentage of the relevant turnover, proportionately allocate profits based on Indian receipts to total business receipts, or adopt any other suitable method. The rule enables fair estimation of taxable income in cases of uncertainty.
Extract of Rule No. 9 of Draft Income-tax Rules, 2026
Rule 9
Determination of income in case of non-residents.
In any case in which the Assessing Officer is of opinion that the actual amount of the income accruing or arising to any non-resident person whether directly or indirectly, through or from –
(a) any asset or source of income in India;
(b) any property in India;
(c) any business connection in India, or cannot be definitely ascertained, the amount of such income for the purposes of assessment to income-tax may be calculated: —
(i) at such percentage of the turnover so accruing or arising as the Assessing Officer may consider to be reasonable;
(ii) on any amount which bears the same proportion to the total profits and gains of the business of such person (such profits and gains being computed in accordance with the provisions of the Act), as the receipts so accruing or arising bear to the total receipts of the business; or
(iii) in such other manner as the Assessing Officer may deem suitable.
