The CBDT vide Notification No. 41/2021-Income-Tax dated May 3, 2021, issued the ‘Income-tax (13th Amendment) Rules, 2021’ to insert new Rule 11UD i.e., ‘threshold for the purpose of significant economic presence’ in Income-tax Rules, 1962 (“Income-tax Rules”) w.e.f. April 1, 2022, which state as under:
- Significant economic presence: The aggregate of payments arising in respect of any goods, services or property by a non-resident with any person in India including provision of download of data or software in India the previous year shall be INR 2 crores.
- Business connection: The number of users in India with whom systematic and continuous business activities are solicited or who are engaged in interaction shall be 3 lakhs.
Note: As per Explanation 2A of the Section 9(1)(i) of the Income tax Act, 1961, the significant economic presence of a non-resident in India shall constitute “business connection” in India and “significant economic presence” which are prescribed as above.
New Rule 11UD reads as below:
“11UD. Thresholds for the purposes of significant economic presence. –
(1) For the purposes of clause (a) of Explanation 2A to clause (i) of sub-section (1) of section 9, the amount of aggregate of payments arising from transaction or transactions in respect of any goods, services or property carried out by a non-resident with any person in India, including provision of download of data or software in India during the previous year, shall be two crore rupees;
(2) For the purposes of clause (b) of Explanation 2A to clause (i) of sub-section (1) of section 9, the number of users with whom systematic and continuous business activities are solicited or who are engaged in interaction shall be three lakhs.”
The Notification can be accessed at: http://egazette.nic.in/WriteReadData/2021/226822.pdf