Section 115A

⁶[Tax on dividends, royalty and technical service fees in the case of foreign companies.

115A. (1) Subject to the provisions of ⁷[sub-sections(lA) and (2)], where the total income of an assessee, being a foreign company, includes any income by way of—

(a) dividends; or

⁸[(aa) interest received from Government or an Indian concern or moneys borrowed or debt incurred by Government or the Indian concern in foreign currency ; or]

⁹[(b) 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 the Indian concern after the 31st day of March, 1976, and where such agreement is with an Indian concern, such agreement is approved by the Central Government ;]

the income-tax payable shall be the aggregate of—

(i) the amount of income-tax calculated on the amount of income by way of dividends, if any, included in the total income, at the rate of twenty-five per cent ;

⁸[(ia) the amount of income-tax calculated on the income by way of interest referred to in clause (aa), if any, included in the total income, at the rate of twenty-five per cent;]

(ii) the amount of income-tax calculated on the income by way of royalty, if any, included in the total income—

(1) on so much of the amount of such income 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, at the rate of twenty per cent ;

(2) on the balance of such income, if any, at the rate of forty per cent ;

(iii) the amount of income-tax calculated on the income by way of fees for technical services, if any, included in the total income, at the rate of forty per cent ; and

(iv) the amount of income-tax with which it would have been chargeable had its total income been reduced by the amount of income referred to in clause (a) ⁸,clause (aa)] and clause (b).

Explanation : For the purposes of this section,—

(a) "fees for technical services" shall have the same meaning as in ¹⁰[Explanation 2]to clause (vii) of sub-section (1) of section 9 ;

(b) "foreign company" shall have the same meaning as in section 80B;

⁸[(bb) "foreign currency" shall have the same meaning as in the Explanation below item (g) of sub-clause (iv) of clause (15) of section 10 ;]

(c) "royalty" shall have the same meaning as in ¹⁰[Explanation 2]to clause (vi) of sub-section (1) of section 9.

¹¹[(IA) Where the royalty referred to in clause (b) of sub-section (1) is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book to an Indian concern, the provisions of sub-section (1) shall apply in relation to such royalty as if the words "and approved by the Central Government" occurring in the said clause had been omitted :

Provided that such book is on a subject, the books on which are permitted, according to the Import Trade Control Policy of the Government of India for the period commencing from the 1st day of April, 1977, and ending with the 31st day of March, 1978, to be imported into India under an Open General Licence.

Explanation : In this sub-section, "Open General Licence" means an Open General Licence issued by the Central Government in pursuance of the Imports (Control) Order, 1955.]

(2) Nothing contained in sub-section (1) shall apply in relation to any income by way of royalty received by a foreign company from an Indian concern in pursuance of an agreement made by it with the Indian concern after the 31st day of March, 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 ; and the provisions of the annual Finance Act for calculating, charging, deducting or computing income-tax shall apply in relation to such income as if such income had been received in pursuance of an agreement made before the 1st day of April, 1976.]