Section 44BB of Income Tax Act

Section 44BB of Income Tax Act

Section 44BB of the Income Tax Act, 1961, deals with the taxation of income from exploration of mineral oils in India. This section provides a special tax regime for non-resident persons engaged in the business of exploration of mineral oils in India. In this article, we will discuss Section 44BB in detail.

What is Section 44BB?

Section 44BB of the Income Tax Act, 1961, provides for a presumptive taxation scheme for non-resident persons engaged in the business of exploration of mineral oils in India. Under this scheme, such persons are taxed at a flat rate of 10% of their total income, without allowing for any deductions or exemptions. This is applicable for assessment years 2020-21 and 2021-22.

How is Income Computed Under Section 44BB?

Under Section 44BB, the income of a non-resident person engaged in the business of exploration of mineral oils in India is presumed to be 10% of the gross receipts received or accrued from such business. The person is not required to maintain any books of accounts or to get the accounts audited.

Who is Eligible to Claim Benefit Under Section 44BB?

The following conditions must be satisfied for a non-resident person to claim the benefit under Section 44BB:

  1. The person must be engaged in the business of exploration of mineral oils in India.
  2. The person must be a non-resident or a foreign company.
  3. The person must not have a permanent establishment in India.
  4. The person must not have opted for the presumptive taxation scheme under any other provision of the Income Tax Act.

Conclusion

Section 44BB of the Income Tax Act, 1961, is a beneficial provision for non-resident persons engaged in the business of exploration of mineral oils in India. The scheme provides for a simple and easy-to-comply-with tax regime that saves the non-resident persons from the hassle of maintaining books of accounts and getting the accounts audited. It is important for such persons to satisfy the conditions laid down under this section to claim the benefit. It is advisable to consult a qualified and experienced tax professional to ensure compliance with the provisions of Section 44BB and other tax laws.

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