Legal Reference
Section 44B (shipping — non-resident), Section 44BB (oil exploration — non-resident), Section 44BBA (aircraft), Section 44BBB (civil construction), ITA 2025
1. Specialized Presumptive Sections for Non-Residents
Beyond the widely-used 44AD and 44ADA, ITA 2025 has several specialized presumptive taxation provisions for non-resident taxpayers in specific industries. These sections fix a deemed profit percentage of gross amounts received in India — removing the need for detailed expense tracking.
2. Section 44B: Shipping Business (Non-Resident)
For non-resident shipping companies carrying passengers or goods from Indian ports:
- Deemed income = 7.5% of the total amount received or receivable (whether in or out of India) for such carriage
- Includes: freight charges, demurrage, and any other amount
- Tax at 40% (foreign company rate) on this 7.5% deemed income
- Effective tax = 40% × 7.5% = 3% of gross shipping revenue from Indian ports
- Indian shipping companies use Section 44B or Tonnage Tax (Sections 135A-135F)
3. Section 44BB: Oil Exploration (Non-Resident)
For non-resident companies engaged in the business of providing services or facilities in connection with oil and gas exploration and production in India:
- Deemed income = 10% of the aggregate amounts paid/payable to the non-resident
- Covers: drilling services, geophysical surveys, seismic data acquisition, consultancy for oil exploration
- Tax at 40% on 10% deemed income = effective 4% of gross receipts
- Can opt out: if actual income is lower than 10%, maintain books and pay tax on actual
4. Section 44BBA: Aircraft (Non-Resident)
For non-resident airlines operating aircraft in India:
- Deemed income = 5% of the total amount received/receivable for carriage of passengers, livestock, mail, or goods from India
- Effective tax = 40% × 5% = 2% of gross aviation receipts from India
- Applicable for international airlines operating to/from Indian airports
5. Section 44BBB: Civil Construction (Non-Resident)
For non-resident companies engaged in construction, assembly, or installation projects or surveys in India under a turnkey contract:
- Deemed income = 10% of the total amount paid/payable
- Effective tax = 40% × 10% = 4% of contract value
- Covers: infrastructure construction, EPC (Engineering Procurement Construction) contracts by foreign companies
6. Opting Out of Specialized Presumptive Sections
Any non-resident covered by Sections 44B, 44BB, 44BBA, or 44BBB can opt out and declare actual income from books — if actual profit is lower than the presumptive rate. Opting out requires: proper books of accounts; and a certificate from a Chartered Accountant. The default is presumptive; opting out is the exception.
7. Why TaxClue
Non-resident companies in shipping, oil, aviation, and construction have specific presumptive provisions that are often more efficient than normal tax. TaxClue advises on these provisions and files returns. Contact us under ITA 2025.
Disclaimer
This article is for general informational and educational purposes only. It does not constitute legal, financial, or professional tax advice. Readers are advised to consult a qualified Chartered Accountant or tax professional before making any decisions. TaxClue Consultech Pvt Ltd accepts no liability. All case studies and examples in this article are illustrative only and do not represent actual persons or transactions.
Need Help with Compliance?
Our CA experts guide you through the entire process — registration to filing.
❓ Frequently Asked Questions
What is Section 44B for shipping?
Section 44B of ITA 2025 provides presumptive taxation for non-resident shipping companies carrying passengers or goods from Indian ports. Deemed income = 7.5% of gross shipping revenue (freight, demurrage, other amounts) from Indian carriage. Tax at 40% (foreign company rate) on this deemed income results in an effective rate of 3% of gross shipping revenue. Indian shipping companies may use this or the Tonnage Tax scheme.
What is Section 44BB for oil exploration?
Section 44BB covers non-resident companies providing services for oil and gas exploration and production in India — drilling, geophysical surveys, seismic data. Deemed income = 10% of gross receipts. Tax at 40% on 10% = effective 4% of total receipts. This simplified computation avoids the need to track costs of deploying rigs, crews, and equipment in India separately.
What is the effective tax rate for non-resident airlines?
Under Section 44BBA, non-resident airlines earn deemed income of 5% of gross receipts from carriage originating in India. Tax at 40% foreign company rate on 5% = effective 2% of gross aviation receipts from Indian routes. This applies to passenger, cargo, and mail carriage from Indian airports by foreign airlines.
Can a non-resident company opt out of these presumptive sections?
Yes. Any non-resident covered by Sections 44B, 44BB, 44BBA, or 44BBB can opt out and declare actual income if actual profits are lower than the presumptive rate. This requires maintaining proper books of accounts and obtaining a CA certificate. The opting out is useful when actual expenses are high and actual profits are below the presumptive rate — making actual tax lower than presumptive tax.
What is Section 44BBB?
Section 44BBB covers non-resident foreign companies undertaking civil construction, assembly, installation, or survey projects in India under turnkey contracts. Deemed income = 10% of total payments received. Tax at 40% on 10% = effective 4% of contract value. This covers large infrastructure EPC contracts awarded to foreign companies for projects like power plants, highways, and industrial facilities in India.
