Section 9 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 9 lists the incomes that the Act treats as accruing or arising in India, even where the payment is made abroad or the recipient is not resident. Sub-sections (2) to (8) cover income through an Indian asset or business connection, salary, dividend, interest, royalty, fees for technical services and a sum of money received without consideration. This article explains sub-sections (1) to (8), as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Under section 9(1), the incomes in sub-sections (2) to (8) are deemed to accrue or arise in India. Sub-section (2) catches income from an Indian asset, property, business connection or the transfer of a capital asset situated in India. Sub-sections (3) to (7) deal with salary, dividend, interest, royalty and fees for technical services. Sub-section (8) deals with certain sums paid by a person resident in India to a non-resident or a person not ordinarily resident. Business connection and significant economic presence are in sub-section (9), and the rest of the section in sub-sections (10) to (13), which are covered in the sibling articles.
How section 9 is split
This article covers sub-sections (1) to (8). Sub-section (9), on business connection and significant economic presence, is in the next article; sub-sections (10) to (13), on indirect transfers, fund managers and the meaning of "through", are in the third article. For residential status, see our post on Section 6 and residential status. If a payment of this kind reaches you from abroad or you pay one, our NRI tax filing team can help.
Section 9(1) and (2): the general rule
Sub-section (1) says the income referred to in sub-sections (2) to (8) shall be deemed to accrue or arise in India. Sub-section (2) names the first group: income accruing or arising, directly or indirectly, through or from:
- (a) any asset or source of income in India;
- (b) any property in India;
- (c) any business connection in India; or
- (d) the transfer of a capital asset situated in India.
"Through" is explained in sub-section (13): it means and includes "by means of", "in consequence of" or "by reason of".
Section 9(3): salary
Income under the head "Salaries" is deemed to accrue or arise in India if it is:
- (a) earned in India. Income payable for (i) services rendered in India and (ii) the rest period or leave period that is preceded and succeeded by services rendered in India and forms part of the service contract of employment is regarded as earned in India; or
- (b) payable by the Government to an Indian citizen for services rendered outside India.
Section 9(4): dividend
Any dividend paid by an Indian company outside India is deemed to accrue or arise in India. Dividend is defined in section 2(40).
Section 9(5): interest
Interest is deemed to accrue or arise in India if it is payable by:
| Payer | When it is deemed to accrue or arise in India |
|---|---|
| The Government | Always, under clause (a)(i) |
| A resident | Except where the interest is on a debt incurred, or moneys borrowed and used, for a business or profession carried on by that resident outside India, or for making or earning any income from a source outside India |
| A non-resident | If the interest is on a debt incurred, or moneys borrowed and used, for the purposes of a business or profession carried on by that non-resident in India |
Banks' permanent establishments (clause (b)). For this purpose, interest payable by the permanent establishment in India of a non-resident person engaged in banking, to the head office or any other permanent establishment or part of that person outside India, is deemed to accrue or arise in India and is chargeable in addition to any income attributable to that permanent establishment. The permanent establishment is deemed a person separate from and independent of the non-resident person, and the provisions on computation, determination of tax and collection and recovery apply accordingly. "Permanent establishment" has the meaning in section 173(c).
Section 9(6): royalty
Royalty is deemed to accrue or arise in India if payable by the Government; by a resident (unless the royalty is for a right, property, information or services used for a business or profession carried on by the resident outside India, or for earning income from a source outside India); or by a non-resident, if it is for a business or profession carried on by the non-resident in India or for earning income from a source in India.
What is "royalty". Consideration (including any lump sum, but excluding consideration that would be income chargeable as "Capital gains") for:
| Item | Subject |
|---|---|
| (i) | Transfer or grant of all or any rights (including a licence) in a patent, invention, model, design, secret formula or process, trade mark or similar property |
| (ii) | Imparting information about the working or use of such property |
| (iii) | Use of such property |
| (iv) | Imparting information about technical, industrial, commercial or scientific knowledge, experience or skill |
| (v) | Use or right to use any industrial, commercial or scientific equipment, except the amounts referred to in section 61(2) (Table: serial number 5) |
| (vi) | Transfer or grant of rights (including a licence) in a copyright, literary, artistic or scientific work, including films or video tapes for television and tapes for radio broadcasting |
| (vii) | Rendering of services in connection with items (i) to (vi) |
Clarifications in clause (c). (i) Transfer of rights includes the transfer or grant of the right to use computer software, including the grant of a licence, irrespective of the medium. (ii) Royalty includes consideration for a right, property or information whether or not the payer has possession or control of it, whether or not the payer uses it directly, and whether or not it is located in India. (iii) "Process" includes transmission by satellite (including up-linking, amplification and conversion for down-linking of any signal), cable, optic fibre or any similar technology, whether or not the process is secret. (iv) "Computer software" means any computer programme recorded on any disc, tape, perforated media or other information storage device and includes any customised electronic data.
Section 9(7): fees for technical services
Fees for technical services are deemed to accrue or arise in India if payable by the Government; by a resident (unless the services are utilised for a business or profession carried on outside India or for earning income from a source outside India); or by a non-resident (if the services are utilised for a business or profession carried on in India or for earning income from a source in India). "Fees for technical services" means any consideration (including any lump sum) for managerial, technical or consultancy services (including the services of technical or other personnel), but not consideration (i) for any construction, assembly, mining or like project undertaken by the recipient, or (ii) that would be income of the recipient chargeable under the head "Salaries".
Section 9(8): sums received without consideration
Income arising outside India, in the nature of a sum referred to in section 2(49)(u), paid by a person resident in India (a) to a non-resident who is not a company, or to a foreign company, or (b) to a person not ordinarily resident in India under section 6(13), is deemed to accrue or arise in India. Clause (49) of section 2 lists the sums that "income" includes.
Examples
Salary. Arjun, a non-resident, works for an Indian company and renders services in India for ten months, then takes a leave period that is preceded and succeeded by services in India and forms part of his contract of employment. Under section 9(3)(a), income payable for the services and for that leave period is regarded as earned in India and deemed to accrue or arise in India.
Royalty. Nexa Labs Pvt Ltd (invented), a resident company, pays a foreign company a lump sum for the use of a patented process in its Indian factory. Under section 9(6)(a)(ii), the royalty is deemed to accrue or arise in India because it is not for a business carried on outside India or income from a source outside India. If instead the payment were for a process used only in a business Nexa carries on outside India, the exception in (ii)(A) would apply.
Technical fees. Beta Builders (invented), a resident, pays a foreign consultant for managerial advice used in its Indian projects. The fee is deemed to accrue or arise in India under section 9(7)(a)(ii). If the foreign party were paid for undertaking a construction project itself, the fee for that project would fall outside the definition in section 9(7)(b)(i).
Section 9 itself prints no rate. Where the deemed income of a non-resident is taxed, and at what rate, depends on other provisions, treaty relief where available (section 159) and the Finance Act of the relevant year.
Need help with income from or to abroad?
Deemed Indian-source income often creates a withholding or a reporting duty for the payer and a filing duty for the recipient. For help with a cross-border payment or a non-resident's return, see our NRI tax filing service.
Key takeaways
- Section 9(1) deems the incomes in sub-sections (2) to (8) to accrue or arise in India.
- Sub-section (2) covers Indian assets, property, business connection and transfer of a capital asset situated in India.
- Salary for services in India, and the leave period between such services, is earned in India.
- Interest, royalty and technical fees follow the same pattern: payable by the Government, or by a resident or a non-resident, with exceptions for businesses or income outside India.
- Royalty and fees for technical services have their own definitions, with exclusions.
- The section prints no rate; other provisions govern the rate.
Read next
- Section 9: business connection in India and significant economic presence
- Section 9: indirect transfer, fund managers and other rules
- Sections 7, 8 and 10: income deemed to be received
- Section 159: double taxation relief
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.