Section 61 of the Income-tax Act, 2025 — Presumptive Taxation of Certain Business Activities of Non-Residents

In plain language

What Section 61 is about

Section 61 of the Income-tax Act, 2025 is a presumptive taxation provision for non-residents who run certain specialised, capital-heavy, cross-border businesses in India. Instead of computing actual profit (revenue minus every expense), the law simply deems a fixed percentage of the gross receipts to be the taxable profit. This removes the near-impossible task of splitting a global shipping line's or airline's worldwide costs against its India-linked earnings.

This single section is a consolidation of six separate presumptive regimes that existed under the Income-tax Act, 1961 — Sections 44B, 44BB, 44BBA, 44BBB, 44BBC and 44BBD. The 2025 Act merged them into one clean table. Section 61 applies from the tax year beginning 1 April 2026 (FY 2026-27).

Who it applies to

• Non-resident ship operators — carriage of passengers, livestock, mail or goods shipped from an Indian port (includes demurrage and handling charges).
• Non-resident cruise-ship operators — a newer category aimed at boosting India's cruise-tourism sector.
• Non-resident aircraft operators — foreign airlines carrying passengers, cargo, mail or livestock from India.
• Foreign companies in turnkey power projects — engaged in civil construction, erection, testing or commissioning of a power plant approved by the Central Government.
• Non-residents providing services/plant for mineral-oil exploration — the oil-and-gas services regime (prospecting, extraction or production of mineral oils).
• Non-residents in specified electronics manufacturing services/technology — a new incentive-linked category (former Section 44BBD).

The deemed-profit rates

The taxable profit is a flat percentage of the aggregate of (A) amounts received in India and (B) amounts received abroad for the India-linked activity:

• Shipping (non-cruise): 7.5% of receipts.
• Cruise ships: 20% of passenger-carriage receipts.
• Aircraft operation: 5% of receipts.
• Turnkey power projects: 10% of the construction/service amount.
• Mineral-oil services: 10% of receipts.
• Electronics manufacturing services / technology: 25% of receipts.

Key conditions and restrictions

• No further deductions: once the deemed profit is fixed, no loss, allowance or deduction under any other provision of the Act is allowed against that presumptive income. The percentage is treated as the net profit already.
• Depreciation is deemed claimed: the written-down value (WDV) of assets used in the business is calculated as if depreciation had been claimed and allowed each year — so the WDV keeps reducing even though you never separately deducted it.
• Right to declare lower actual profit: for the first five categories (shipping, cruise, aircraft, turnkey power, mineral oil), a non-resident may claim that real profits are lower than the presumptive figure — but only if he maintains books of account under Section 62 and gets them audited and files the audit report under Section 63. The electronics/technology category (25%) does not carry this opt-out.
• Overrides normal computation: the general business-income computation rules (broadly Sections 26 to 54 of the 2025 Act) are switched off to the extent they conflict with Section 61.

How it interacts with other provisions

Section 61 works in tandem with Section 62 (books of account) and Section 63 (audit) — these are the gatekeepers for anyone wanting to declare lower actual profit. It also sits within the "Profits and gains of business or profession" head, so the computed income is added to the non-resident's total income and taxed at the applicable rates (a foreign company is taxed at the corporate rate; individuals at slab rates). Tax already withheld under TDS provisions on the receipts is set off against the final liability.

Practical implications

For a foreign shipping line or airline, Section 61 is a huge simplification — no need to allocate crew, fuel and depreciation across dozens of countries. But the flip side is real: if your genuine margin on Indian operations is below the deemed rate (say your ship actually ran a loss on an Indian voyage), you pay tax on a notional profit unless you go through the books-and-audit route under Sections 62-63. For high-value contracts, the audit route is usually worth the compliance cost.