Under Section 44B of the Income-tax Act, 1961, a non-resident running a shipping business is taxed on a presumptive basis: 7.5% of the gross freight collected for carrying passengers, livestock, mail or goods from an Indian port is deemed to be its taxable profit. No books, no deductions. The tax is secured before the ship leaves the port under Section 172. A beneficial DTAA can override this under Section 90.
Non-Resident Presumptive Sections — Rate Table
Section 44B is one of a family of presumptive provisions for specific non-resident businesses. Each fixes a flat deemed-profit percentage on gross Indian receipts.
| Section | Applies to | Business | Deemed profit |
|---|---|---|---|
| 44B | NR shipping companies | Carriage from Indian ports | 7.5% |
| 44BB | NR oil & gas contractors | Services / plant for mineral-oil exploration | 10% |
| 44BBA | NR foreign airlines | Carriage of passengers / goods from India | 5% |
| 44BBB | Foreign cos in power projects | Turnkey civil construction for power plants | 10% |
| 44BBC | NR cruise-ship operators | Operation of cruise ships (Budget 2025) | 20% |
| 44BBD | NR electronics service providers | Setting up an electronics mfg facility | 25% |
Rates are of gross amounts paid/payable in India (plus, for 44B/44BBA, amounts received in India for carriage from outside India). Section numbers are the well-known 1961 Act references; the Income-tax Act, 2025 (AY 2026-27) merges them under Clause 61 but keeps the same rates.
A transient foreign shipper rarely keeps Indian books or has a permanent establishment here. Section 44B replaces a full profit computation with a flat 7.5% of freight, so India can assess and collect quickly. The trade-off: the non-resident cannot claim actual expenses, depreciation or losses against this deemed profit.
How Section 44B Is Computed
The 7.5% is applied to the aggregate of amounts paid or payable to the non-resident (or anyone on its behalf) for carriage of passengers, livestock, mail or goods shipped at any Indian port, plus amounts received or deemed received in India for carriage shipped at a port outside India.
- The freight base includes demurrage, handling and similar charges.
- The 7.5% figure is final deemed profit — no deduction for actual costs, depreciation or brought-forward losses.
- Corporate tax rate for a foreign company then applies on this 7.5% slice.
- Books of account and audit under Section 44AB are not required for income covered by 44B.
44B in Numbers — a Sample Voyage
7.5% Section 44B — shipping
5% Section 44BBA — airline
The sister sections 44BB, 44BBB, 44BBC and 44BBD let a non-resident declare a lower actual profit if it maintains books and gets them audited. Section 44B (shipping) and 44BBA (airlines), by contrast, are largely mandatory presumptive regimes for the covered Indian-source income — the practical relief comes from a DTAA, not from opting out.
Running or chartering ships that call at Indian ports? Get your 44B position and s.172 filings handled.
Talk to an NR Tax Expert →Section 172 — Tax Before the Ship Sails
Section 44B fixes the profit; Section 172 collects the tax. For an occasional voyage, the master or agent of the ship must settle the tax at the port before the ship is cleared to leave.
- Section 172 return is filed voyage-by-voyage before departure.
- The non-resident may instead opt to be assessed on a full-year basis under Section 172(7), claiming credit for tax already paid per voyage.
- The Indian payer must also apply TDS on freight to non-resident shippers where applicable; the s.172 mechanism secures the tax even without a permanent establishment.
Paying freight to a foreign shipping line? Confirm your TDS and s.172 obligations.
See TDS on non-residents →44BB, 44BBA, 44BBB, 44BBC & 44BBD
- Section 44BB — 10%: non-residents supplying services, facilities or plant & machinery on hire for prospecting, extraction or production of mineral oils (petroleum, natural gas). Actual profit allowed if lower, with books & audit.
- Section 44BBA — 5%: non-resident foreign airlines on receipts for carriage of passengers, livestock, mail or goods from any place in India — the lowest deemed-profit rate in the family.
- Section 44BBB — 10%: foreign companies executing turnkey civil-construction / erection contracts for power (generation, transmission, distribution) projects approved by the Central Government.
- Section 44BBC — 20%: non-resident cruise-ship operators, introduced by Budget 2025 (effective AY 2025-26), on passenger-carriage receipts subject to prescribed conditions.
- Section 44BBD — 25%: non-residents providing services or technology to set up an electronics-manufacturing facility in India, introduced by Budget 2025 (effective AY 2026-27).
Presumptive 44B suits you if
- You are a non-resident shipper with occasional Indian-port calls
- You have no Indian books or permanent establishment
- You want quick voyage-wise assessment and clearance
- No beneficial DTAA relief is available to you
Look beyond 44B if
- A DTAA exempts your shipping income at source
- Your actual margin is far below 7.5% (limited relief for 44B)
- You operate cruise ships (44BBC) or oilfield services (44BB) instead
- You have a permanent establishment and regular Indian accounts
DTAA Override under Section 90
Under Section 90, where India has a Double Taxation Avoidance Agreement with the non-resident's country and the treaty is more beneficial, the treaty prevails. Many DTAAs allocate shipping and air-transport profits solely to the country of residence, exempting them from Indian tax entirely — provided the non-resident furnishes a valid Tax Residency Certificate and Form 10F.
From AY 2026-27, the Income-tax Act, 2025 re-enacts these provisions (44B / 44BB / 44BBA / 44BBB / 44BBC / 44BBD merged under Clause 61) with the same deemed-profit rates. Search intent and case law still use the familiar 1961-Act numbers, so continue to quote them and note the 2025 clause where filings require it.
Frequently Asked Questions
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