Income Tax Act, 2025
Section 7: Ins. by Act 32 of 2003, s. 5 (w.e.f. 12004).
7. Ins. by Act 32 of 2003, s. 5 (w.e.f. 12004).
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1[(a) has and habitually exercises in India, an authority to conclude contracts on behalf of the
non-resident or habitually concludes contracts or habitually plays the principal role leading to
conclusion of contracts by that non-resident and the contracts are––
(i) in the name of the non-resident; or
(ii) for the transfer of the ownership of, or for the granting of the right to use, property
owned by that non-resident or that non-resident has the right to use; or
(iii) for the provision of services by the non-resident; or]
(b) has no such authority, but habitually maintains in India a stock of goods or merchandise
from which he regularly delivers goods or merchandise on behalf of the non-resident; or
(c) habitually secures orders in India, mainly or wholly for the non-resident or for that
non-resident and other non-residents controlling, controlled by, or subject to the same common
control, as that non-resident:
Provided that such business connection shall not include any business activity carried out
through a broker, general commission agent or any other agent having an independent status, if
such broker, general commission agent or any other agent having an independent status is acting
in the ordinary course of his business:
Provided further that where such broker, general commission agent or any other agent works
mainly or wholly on behalf of a non-resident (hereafter in this proviso referred to as the principal
non-resident) or on behalf of such non-resident and other non-residents which are controlled by
the principal non-resident or have a controlling interest in the principal non-resident or are subject
to the same common control as the principal non-resident, he shall not be deemed to be a broker,
general commission agent or an agent of an independent status.
2[Explanation 2A.––For the removal of doubts, it is hereby clarified that the significant economic
presence of a non-resident in India shall constitute “business connection” in India and “significant
economic presence” for this purpose, shall mean––
(a) transaction in respect of any goods, services or property carried out by a non-resident in
India including provision of download of data or software in India, if the aggregate of payments
arising from such transaction or transactions during the previous year exceeds such amount as
may be prescribed; or
(b) systematic and continuous soliciting of business activities or engaging in interaction with
such number of users as may be prescribed, in India through digital means:
Provided that the transactions or activities shall constitute significant economic presence in
India, whether or not,—
(i) the agreement for such transactions or activities is entered in India;
(ii) the non-resident has a residence or place of business in India; or
(iii) the non-resident renders services in India:
Provided further that only so much of income as is attributable to the transactions or
activities referred to in clause (a) or clause (b) shall be deemed to accrue or arise in India.]
has and habitually exercises in India, an authority to conclude contracts on behalf of the
non-resident or habitually concludes contracts or habitually plays the principal role leading to
conclusion of contracts by that non-resident and the contracts are––
in the name of the non-resident; or
for the transfer of the ownership of, or for the granting of the right to use, property
owned by that non-resident or that non-resident has the right to use; or
for the provision of services by the non-resident; or]
has no such authority, but habitually maintains in India a stock of goods or merchandise
from which he regularly delivers goods or merchandise on behalf of the non-resident; or
habitually secures orders in India, mainly or wholly for the non-resident or for that
non-resident and other non-residents controlling, controlled by, or subject to the same common
control, as that non-resident:
Provided that such business connection shall not include any business activity carried out
through a broker, general commission agent or any other agent having an independent status, if
such broker, general commission agent or any other agent having an independent status is acting
in the ordinary course of his business:
Provided further that where such broker, general commission agent or any other agent works
mainly or wholly on behalf of a non-resident (hereafter in this proviso referred to as the principal
non-resident) or on behalf of such non-resident and other non-residents which are controlled by
the principal non-resident or have a controlling interest in the principal non-resident or are subject
to the same common control as the principal non-resident, he shall not be deemed to be a broker,
general commission agent or an agent of an independent status.
2[Explanation 2A.––For the removal of doubts, it is hereby clarified that the significant economic
presence of a non-resident in India shall constitute “business connection” in India and “significant
economic presence” for this purpose, shall mean––
transaction in respect of any goods, services or property carried out by a non-resident in
India including provision of download of data or software in India, if the aggregate of payments
arising from such transaction or transactions during the previous year exceeds such amount as
may be prescribed; or
systematic and continuous soliciting of business activities or engaging in interaction with
such number of users as may be prescribed, in India through digital means:
Provided that the transactions or activities shall constitute significant economic presence in
India, whether or not,—
the agreement for such transactions or activities is entered in India;
the non-resident has a residence or place of business in India; or
the non-resident renders services in India:
Provided further that only so much of income as is attributable to the transactions or
activities referred to in clause
or clause
shall be deemed to accrue or arise in India.]