Amendment of section 115A.
27. In section 115A of the Income-tax Act, in sub-section (1), in clause (b), with effect from the 1st day of April, 2016,-
(a) in sub-clause (A), for the words “twenty-five per cent.”, the words “ten per cent.” shall be substituted;
(b) in sub-clause (B), for the words “twenty-five per cent.”, the words “ten per cent.” shall be substituted.
Notes on Clauses:
Clause 27 of the Bill seeks to amend section 115A of the Income-tax Act relating to tax on dividends, royalty and technical service fees in the case of foreign companies.
The existing provisions of the aforesaid section provide for determination of tax in case of a non-resident taxpayer where the total income includes any income by way of Royalty and Fees for technical services received by such non-resident from Government or an Indian concern after the 31st March, 1976, and which is not effectively connected with permanent establishment, if any, of the non-resident in India. The rate of tax currently provided is twenty-five per cent. and is applicable on the gross amount of such income.
It is proposed to amend the said section to provide that in case of a non-resident taxpayer, where the total income includes any income by way of Royalty and Fees for technical Services received under an agreement entered after the 31st March, 1976, and which are not effectively connected with permanent establishment, if any, of the non-resident in India, the rate of tax on the gross amount of such income shall be ten per cent.
This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-17 and subsequent assessment years.
