Income Tax Act, 2025
Section 2: Ins. by Act 20 of 2015, s. 5 (w.e.f. 12016).
2. Ins. by Act 20 of 2015, s. 5 (w.e.f. 12016).
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1[Provided further that nothing contained in this clause shall apply in relation to so much of the
income by way of royalty as consists of lump sum payment made by a person, who is a resident, for
the transfer of all or any rights (including the granting of a licence) in respect of computer software
supplied by a non-resident manufacturer along with a computer or computer-based equipment under
any scheme approved under the Policy on Computer Software Export, Software Development and
Training, 1986 of the Government of India.]
Explanation 1.—For the purposes of the 2[first proviso], an agreement made on or after the 1st
day of April, 1976, shall be deemed to have been made before that date if the agreement is made in
accordance with proposals approved by the Central Government before that date; so, however, that,
where the recipient of the income by way of royalty is a foreign company, the agreement shall not be
deemed to have been made before that date unless, before the expiry of the time allowed under subsection (1) or sub-section (2) of section 139 (whether fixed originally or on extension) for furnishing
the return of income for the assessment year commencing on the 1st day of April, 1977, or the
assessment year in respect of which such income first becomes chargeable to tax under this Act,
whichever assessment year is later, the company exercises an option by furnishing a declaration in
writing to the 3[Assessing Officer] (such option being final for that assessment year and for every
subsequent assessment year) that the agreement may be regarded as an agreement made before the 1st
day of April, 1976.
Explanation 2.—For the purposes of this clause, “royalty” means consideration (including any
lump sum consideration but excluding any consideration which would be the income of the recipient
chargeable under the head “Capital gains”) for—
(i) the transfer of all or any rights (including the granting of a licence) in respect of a patent,
invention, model, design, secret formula or process or trade mark or similar property;
(ii) the imparting of any information concerning the working of, or the use of, a patent,
invention, model, design, secret formula or process or trade mark or similar property;
(iii) the use of any patent, invention, model, design, secret formula or process or trade mark
or similar property;
(iv) the imparting of any information concerning technical, industrial, commercial or
scientific knowledge, experience or skill;
4[(iva) the use or right to use any industrial, commercial or scientific equipment but not
including the amounts referred to in section 44BB;]
(v) the transfer of all or any rights (including the granting of a licence) in respect of any
copyright, literary, artistic or scientific work including films or video tapes for use in connection
with television or tapes for use in connection with radio broadcasting, but not including
consideration for the sale, distribution or exhibition of cinematographic films; or
(vi) the rendering of any services in connection with the activities referred to in sub-clauses
(i) to (iv), (iva) and (v).
5[Explanation 3.—For the purposes of this clause, “computer software” means any computer
programme recorded on any disc, tape, perforated media or other information storage device and
includes any such programme or any customized electronic data.]
6[Explanation 4.—For the removal of doubts, it is hereby clarified that the transfer of all or any
rights in respect of any right, property or information includes and has always included transfer of all
or sub-section
of section 139 (whether fixed originally or on extension) for furnishing
the return of income for the assessment year commencing on the 1st day of April, 1977, or the
assessment year in respect of which such income first becomes chargeable to tax under this Act,
whichever assessment year is later, the company exercises an option by furnishing a declaration in
writing to the 3[Assessing Officer] (such option being final for that assessment year and for every
subsequent assessment year) that the agreement may be regarded as an agreement made before the 1st
day of April, 1976.
Explanation 2.—For the purposes of this clause, “royalty” means consideration (including any
lump sum consideration but excluding any consideration which would be the income of the recipient
chargeable under the head “Capital gains”) for—
the transfer of all or any rights (including the granting of a licence) in respect of a patent,
invention, model, design, secret formula or process or trade mark or similar property;
the imparting of any information concerning the working of, or the use of, a patent,
invention, model, design, secret formula or process or trade mark or similar property;
the use of any patent, invention, model, design, secret formula or process or trade mark
or similar property;
the imparting of any information concerning technical, industrial, commercial or
scientific knowledge, experience or skill;
4[
the use or right to use any industrial, commercial or scientific equipment but not
including the amounts referred to in section 44BB;]
the transfer of all or any rights (including the granting of a licence) in respect of any
copyright, literary, artistic or scientific work including films or video tapes for use in connection
with television or tapes for use in connection with radio broadcasting, but not including
consideration for the sale, distribution or exhibition of cinematographic films; or
the rendering of any services in connection with the activities referred to in sub-clauses
to
and