Introduction

The Government of India is making big moves to establish the country as a global leader in Electronics System Design and Manufacturing (ESDM). To facilitate this, the Finance Bill 2025 introduces a new presumptive taxation scheme for non-residents under Section 44BBD who provide services or technology to India’s electronics manufacturing sector.

Why This Change?

The Ministry of Electronics and Information Technology (MeitY) has launched several initiatives to attract foreign expertise in setting up semiconductor and display manufacturing facilities in India. Many non-residents will be involved in deploying cutting-edge technology and support services to help India achieve its ESDM goals.

To ensure tax clarity and ease of business, the government is introducing Section 44BBD under the Income Tax Act.

What’s Changing?

Under the new regime provided in Section 44BBD :

✅ Non-resident entities providing services or technology to electronics manufacturing companies in India will be taxed under a presumptive taxation scheme under Section 44BBD.

✅ 25% of the total receipts from such services will be considered taxable profits under Section 44BBD.

✅ This means an effective tax rate of less than 10% on gross receipts, ensuring tax certainty for foreign firms.

Key Benefits for Businesses

🔹 Simplified Tax Compliance – No need for complex calculations and deductions; a straightforward presumptive system under Section 44BBD.

🔹 Encourages Foreign Investment – Lower tax burdens make India a more attractive destination for global companies.

🔹 Boosts Electronics & Semiconductor Sector – Encourages non-resident firms to bring advanced technology, skills, and innovation into India.

Who Will Benefit?

📌 Non-resident companies offering technology and consulting services to Indian electronics manufacturing firms.
📌 Foreign firms engaged in semiconductor and display manufacturing projects in India.
📌 Companies involved in setting up and operating connected electronic goods production units under notified schemes.

Effective Date

This new taxation regime comes into effect from April 1, 2026, and will apply from the assessment year 2026-27 onwards.

Need Tax Advice?

If you need expert guidance on how this new tax regime impacts your business, reach out to us today!

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