Section 61 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 61 fixes the profits of six named businesses of non-residents and foreign companies as a stated percentage of specified receipts, instead of computing them from the books. This article explains the Table in section 61(2) and the sub-sections around it, as per the Income-tax Act, 2025 as amended by the Finance Act, 2026. Later amendments, rules and notifications should be checked. If you are a non-resident in one of these businesses, our NRI tax filing service can help you apply the right row.
For six businesses (ships, cruise ships, aircraft, turnkey power projects, mineral-oil services and technology services for electronics manufacturing) the profits are deemed to be a percentage of the sum of two receipt streams, A and B, as set out in the Table. Sections 26 to 54 give way to the extent they are contrary. For serial numbers 4 and 5 only, the assessee may claim lower actual profits if books are kept (section 62) and accounts audited (section 63). No loss, allowance or deduction is allowed against the computed income.
How section 61(1) and (2) work
Section 61(1) says that sections 26 to 54, to the extent contrary to section 61, do not apply to the manner of computing profits and gains of the specified business. Section 61(2) then says that the profits and gains of any specified business in column B of the Table, carried on by a specified assessee in column C during a tax year, are computed in the manner in column D and are deemed to be the profits and gains of that business chargeable to tax for the tax year under the head "Profits and gains of business or profession".
The Table has four columns: serial number, specified business, specified assessee, and profits and gains of business or profession. The cells are printed letter-spaced in places and the rows run over page breaks; the table below is rebuilt from the printed lines.
The Table in section 61(2)
| Serial number | Specified business | Specified assessee | Profits and gains (column D) |
|---|---|---|---|
| 1 | Operation of ships, other than the cruise ships referred to in serial number 2 | Non-resident | 7.5% of (A + B) |
| 2 | Operation of cruise ships (subject to conditions as may be prescribed) | Non-resident | 20% of (A + B) |
| 3 | Operation of aircraft | Non-resident | 5% of (A + B) |
| 4 | Civil construction, erection, testing or commissioning of plant or machinery in connection with a turnkey power project approved by the Central Government | Foreign company | 10% of the amount towards such civil construction, erection, testing or commissioning, paid or payable to the assessee or any other person on his behalf, whether in or outside India |
| 5 | Providing services or facilities (including supply of plant and machinery on hire) for prospecting, extraction or production of mineral oils | Non-resident | 10% of (A + B) |
| 6 | Providing services or technology in India for setting up an electronics manufacturing facility, or in connection with manufacturing or producing electronic goods, article or thing in India, to a resident company | Non-resident | 25% of (A + B) |
What A and B mean in each row
| Serial number | A | B |
|---|---|---|
| 1 (ships) | Sum on account of carriage of passengers, livestock, mail or goods shipped at any port in India, paid or payable, in or outside India, to the assessee or any other person on his behalf (including demurrage, handling or similar charges) | Sum on account of carriage of passengers, livestock, mail or goods shipped at any port outside India, received or deemed to be received in India, by the assessee or any other person on his behalf (including demurrage, handling or similar charges) |
| 2 (cruise ships) | Sum on account of carriage of passengers, paid or payable to the assessee or any other person on his behalf | Sum on account of carriage of passengers received or deemed to be received by the assessee or any other person on his behalf |
| 3 (aircraft) | Sum on account of carriage of passengers, livestock, mail or goods from any place in India, paid or payable (in or outside India) to the assessee or any other person on his behalf | Same carriage from any place outside India, received or deemed to be received in India, by the assessee or any other person on his behalf |
| 5 (mineral oils) | Sum on account of services and facilities, or supply of plant and machinery on hire, used or to be used in prospecting for, or extraction or production of, mineral oils in India, paid or payable (in or outside India) to the assessee or any other person on his behalf | The same for mineral oils outside India, received or deemed to be received in India, by the assessee or any other person on his behalf |
| 6 (technology) | Amount paid or payable to the non-resident assessee or any person on his behalf on account of providing services or technology | Amount received or deemed to be received by the non-resident assessee, or on behalf of the non-resident assessee, on account of providing services or technology |
Serial number 4 has no A and B; it is a single percentage of the amount paid or payable.
Claiming lower profits: section 61(3)
For serial numbers 4 and 5, section 61(3) lets the specified assessee claim that the profits actually earned are lower than the profits computed under section 61(2), if he (a) keeps and maintains the books of account and other documents required under section 62, and (b) gets the accounts audited and furnishes the audit report as required under section 63. Serial numbers 1, 2, 3 and 6 carry no such option in the text. Section 62(2)(c) and section 63 (Table, serial number 2) then bring in books and audit where an assessee claims lower income than the deemed profits; see section 62 on books of account and section 63 on tax audit.
No set-off and depreciation: section 61(4) and (5)
- Section 61(4): any loss, allowance or deduction allowable under the Act shall not be allowed against the income computed under section 61(2).
- Section 61(5): the written down value of any asset used for the specified business or profession is computed as if the assessee in column C had claimed, and had actually been allowed, depreciation for each of the relevant tax years.
Limits on serial numbers 5 and 6: section 61(6) to (9)
- Section 61(6): for serial number 5, section 61 does not apply where section 54, 59, 207 or 527 applies for computing profits or any other income referred to in those sections. Section 59 is explained in our article on sections 59 and 60. Section 59(3) in turn disapplies section 61 for serial number 5 in respect of the income referred to in section 59.
- Section 61(7): for serial number 5, "plant" includes ships, aircraft, vehicles, drilling units, scientific apparatuses and equipment used for the specified business.
- Section 61(8): for serial number 6, the resident company must be establishing or operating an electronics manufacturing facility, or a connected facility, for manufacturing or producing electronic goods, article or thing in India, under a scheme notified by the Central Government in the Ministry of Electronics and Information Technology, and must satisfy the conditions as may be prescribed. The scheme itself, and the prescribed conditions, are not in the text consulted; the detail is left to the rules.
- Section 61(9): sections 59 and 207 do not apply to the amounts referred to in serial number 6.
For cruise ships (serial number 2) the Table itself says "subject to the conditions as may be prescribed"; those conditions are also not in the Act.
Worked examples
Aircraft operator (serial number 3). Orlanda Skyways Ltd., a non-resident carrier, has for a tax year: A = Rs. 80,00,000 (amount paid or payable for carriage from places in India) and B = Rs. 20,00,000 (amount for carriage from places outside India received or deemed received in India). A + B = Rs. 1,00,00,000. Deemed profit at 5% = Rs. 5,00,000. (The amounts are invented.)
Technology services (serial number 6). Meridian Tech Services Pte., a non-resident, provides services to a qualifying resident company. A = Rs. 3,00,00,000 and B = Rs. 1,00,00,000 (invented). A + B = Rs. 4,00,00,000. Deemed profit at 25% = Rs. 1,00,00,000. No loss, allowance or deduction can be set against this amount under section 61(4).
Need help with presumptive income of a non-resident?
Choosing between the deemed profit and a claim of lower actual profit, and keeping the books and audit in order, needs care with each tax year's receipts. Our NRI tax filing service can review the agreements and receipts behind your A and B figures.
Key takeaways
- Section 61 covers six businesses; the Table fixes the percentage of (A + B), or of a single amount for serial number 4.
- The percentages as printed are 7.5%, 20%, 5%, 10%, 10% and 25% for serial numbers 1 to 6.
- Only serial numbers 4 and 5 allow a claim of lower actual profit, and only with books and audit.
- No loss, allowance or deduction is set against the computed income.
- Serial number 6 depends on a notified scheme and prescribed conditions that are not in the Act.
Read next
- Sections 59–60: royalty, technical fees and head office expenditure of non-residents
- Sections 64–65: co-operative bank reorganisation
- Section 62: books of account
- Section 58: presumptive taxation
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.