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Section 44BBB of Income Tax Act


June 5, 2021


5 mins read

Section 44BBB of Income Tax act 1961 – Foreign Companies Engaged in the Business of Civil Construction etc. in certain Turnkey Power Projects

Section Section 44BBB of Income Tax Act
Particulars Income of a foreign company engaged in the business of civil construction or the business of erection of plant or machinery or testing or commissioning thereof, in connection with turnkey power projects shall be computed on presumptive basis.
Rate of presumptive income/deduction 10% (Note: Lower profits may be claimed if the assessee maintains books of account and gets them audited.)
Type of business Foreign Company

Eligible Assessee

A foreign company,  which is engaged in the following activities in connection with a turnkey power project approved by the Central Government (through Department of Power in Ministry of Energy in terms of Circular 552) , may opt for presumptive taxation provisions of Section 44BBB of the Income Tax Act : –

  • The business of civil construction in connection with the turnkey project ; or
  • Erection of plant or machinery in connection with the turnkey project ; or
  • Testing or commissioning of such plant and machinery in connection with the turnkey project

International Taxation Services

Presumptive Income – Section 44BBB of Income tax Act 1961

Once the aforesaid conditions are satisfied, the following provisions shall apply : –

  • Taxable income of the non-resident shall be equal to 10% (i.e., presumptive income) of the amount paid or payable .
  • Such amount may be paid or payable to the assessee or to any person on his behalf,
  • The amount may be paid or payablein India or outside India.

Deduction of any Expenditure

No deduction of any expenditure , which is incurred under   Section 28 to 44AA would be allowed , while computing presumptive income of the non-resident u/s 44BBB.

Option to claim lower profits – Section 44BBB of Income tax Act 1961

  1. An assessee may claim lower income than the presumptive rate of 10%, if such assessee :
    1. Keeps and maintains books of account under section 44AA(2); and
    2. Gets books of accounts audited and furnish a report of such audit under section 44AB.

Note: The assessment in all such cases shall be done by the Assessing Officer under section 143(3).

For any queries, please write them in the Comment Section or Talk to our tax expert

Presumptive Taxation Provisions for Non residents

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.


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