Presumptive Taxation for Non-Residents in Electronics Sector – FAQs

The Finance Bill 2025 introduces a presumptive taxation regime for non-residents offering services or technology to resident companies in India’s electronics manufacturing sector, including semiconductor fabrication. Prior to this amendment, non-resident companies were taxed on business income at standard rates, without any specific presumptive taxation scheme. The new scheme, under section 44BBD, deems 25% of the total amount received by non-residents for providing services or technology as profits from the business. The change, effective from April 1, 2026, applies to transactions in the 2025-26 financial year and aims to simplify tax calculations, reduce compliance costs, and enhance certainty for foreign companies contributing to India’s electronics sector. This scheme also extends to non-residents providing technical personnel.

FAQs: Scheme of presumptive taxation extended for non-resident providing services for electronics manufacturing facility: Budget 2025

Q.1 What is the benefit given by Finance Bill 2025 to non-residents engaged in business of providing services or technology to a resident company which is engaged in electronics manufacturing facility including semi-conductor fabrication in India?

Ans. A presumptive taxation regime for such non-residents has been provided.

Q.2 What was the scheme of taxation in respect of such activity/such persons prior to Finance Bill, 2025?

Ans. Prior to the proposed amendment, a non-resident or a foreign company was liable to tax as business income on the profits from this activity at the applicable rates. There was no separate scheme for presumptive taxation for such activity/person.

Q.3 What is presumptive taxation regime?

Ans. Presumptive taxation is a simplified method of calculating taxes for eligible taxpayers. The main motive is to bring tax certainty to certain specified businesses. This reduces compliance costs and promotes ease of doing business.

The profits of the business are deemed to be certain percentage of sales/turnover or receipts.

Q.4 What are the main provisions of section 44BBD introduced in Finance Bill 2025?

Ans. As per new section 44BBD, 25% of the aggregate amount received/ receivable by, or paid/ payable to, the non-resident, on account of provision of services or technology, are deemed as profits and gains of such non-resident from this business.

Q.5 When the provisions of section 44BBD are going to be effective?

Ans. This amendment will take effect from the 01.04.2026 and will, accordingly, apply to the assessment year 2026-27 onwards. The amendment therefore applies to transactions undertaken in financial year 2025-26.

Q.6 Which companies will benefit from this change?

Ans. The provision directly applies to non-resident companies which are offering services or technology to electronic Manufacturing industry in India. The certainty provided in terms of taxation to such companies will promote development of manufacturing Industry in India in the electronics sector.

Q.7. Will the scheme be applicable where technical personnel are provided by such non-resident?

Ans. Yes. This presumptive scheme of taxation is applicable to non-resident providing services or technology. Therefore, where technical personnel are provided by the non-resident, it will be part of presumptive scheme.