Income-tax Act, 1961 · Chapter IV: Computation of Total Income · D.—Profits and gains of business or profession
Section 44D: Special provisions for computing income by way of royalties, etc., in the case of foreign companies
The Income-tax Act, 1961 was repealed by the Income-tax Act, 2025 from 1 April 2026. The text is kept here because the judgments below apply it.
Notwithstanding anything to the contrary contained in sections 28 to 44C, in the case of an assessee, being a foreign company,—
(a) the deductions admissible under the said sections in computing the income by way of royalty or fees for technical services received [from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or with the Indian concern] before the 1st day of April, 1976, 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 trade mark or similar property;
(b) no deduction in respect of any expenditure or allowance shall be allowed under any of the said sections in computing the income by way of royalty or fees for technical services received [from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or with the Indian concern] after the 31st day of March, 1976 [but before the 1st day of April, 2003;] * * * * *
Explanation.—For the purposes of this section,—
(a) —fees for technical services‖ shall have the same meaning as in [Explanation 2 to clause (vii) of sub-section (1) of section 9] ;
(b) —foreign company‖ shall have the same meaning as in section 80B;
(c) —royalty‖ shall have the same meaning as in [Explanation 2 to clause (vi) of sub-section (1) of section 9];
(d) royalty received [from Government or an Indian concern in pursuance of an agreement made by a foreign company with Government or with the Indian concern] after the 31st day of March, 1976, shall be deemed to have been received in pursuance of an agreement made before the 1st day of April, 1976, if such agreement is deemed, for the purposes of the proviso to clause (vi) of sub-section (1) of section 9, to have been made before the 1st day of April, 1976.]
Source: India Code (Legislative Department), the text of the Act as it stood before its repeal. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.