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Provisions of Sections 44D, 44DA and 115A in brief for the Assessment Year 2018-19 & 2019-20

Royalty or Fees for Technical service received by a foreign company or a non-resident non-corporate assessee from Government or an Indian concern

Deduction under section 28 to 44D and 57

Deduction under Section 80CCC to 80U

Rate of Tax on such royalty or fees for the Assessment years 2018-19 and 2019-20

A. Such royalty is received under an agreement made before April 1, 1961 or such technical fees is received under an agreement made before March 1, 1964

Al. Where the agreement is approved by the  Government

Note 1

Deduction is available

40%

A2. Where the agreement is not approved

Note 1

Deduction is available

40%

B. Such royalty is received under an agreement made after March 31, 1961 but before April 1, 1976 or such technical fees is received under an agreement made after February 29, 1964 but before April 1, 1976

B1. Where agreement is approved by the Central Government

Note 1

Deduction is  available

50%

B2. Where such agreement is not approved by the Central Government

Note 1

Deduction is  available

40%

C. Such royalty or technical fees is received under an agreement made after March31, 1976 but before April 1, 2003

C1. Where such agreement is with the Government

No deduction

Deduction is  available

10%

C2. Where such agreement is with an Indian concern the agreement is approved by the Central Government

No deduction

Deduction is  available

10%

C3. Where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy

No deduction

Deduction is  available

10%

C4. Where such royalty is in consideration for the transfer of all or any rights (including the granting available of a licence) in respect of copyright in any book on a subject referred to in the proviso to sub-section (1A) of section 115A to the Indian concern or in respect of
computer software referred to in the second proviso to section 115A(1A) to a person resident in India

No deduction

Deduction is  available

10%

C5. In any other case

No deduction if taxpayer is a foreign company (non-resident non- corporate assessee can claim deduction)

Deduction is  available

40% in the case of foreign company (applicable normal rate in the
case of non- resident non-corporate assessee)

D. Such royalty or technical fee is received under an agreement made after March 31, 2003

D1. Where royalty and technical fees is effectively connected to Permanent Establishment (PE) in India

Deduction is  available

Deduction is  available

Applicable rate

D2. Where PE is absent but the case js covered by section 115A(1) [ i.e., C1 to C4 (supra)

No Deduction

Deduction is  available

10%

D3. In any other case

Deduction is available [see Note 3]

Deduction is available

Applicable rate

Notes:

1.         Deduction shall not exceed in the aggregate twenty per cent of the gross amount of such royalty or fees as reduced by so much of the gross amount of such royalty as consists of lump sum consideration for the transfer outside India of, or the imparting of information outside India in respect of, any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process or trademark or similar property.

2.         The tax rates given in the column 4 of the table supra are not applicable where a lower rate is prescribed under an Avoidance of Double Taxation Agreement entered into by the Central Government under section 90 .

3.         Neither section 44D (agreement is made after March 31, 2003) nor section 115A(3) (it is not agreement covered by C1 to C4) will apply in such a case. In other words the computation will be governed by the normal provisions of the Act.




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