Section 306
Section 306: who may be regarded as the agent of a non-resident
Section 306 defines "agent" in relation to a non-resident for tax purposes - it covers employees, people with a business connection, income conduits and trustees in India, plus anyone who has acquired a capital asset in India by transfer, while carving out genuinely independent brokers and guaranteeing a hearing before agent status is fixed.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
Who counts as an "agent" of a non-resident
For the purposes of the Act, "agent", in relation to a non-resident, includes:
- Any person in India who is employed by or on behalf of the non-resident.
- Any person in India who has any business connection with the non-resident.
- Any person in India from or through whom the non-resident is in receipt of any income, whether directly or indirectly.
- Any person in India who is the trustee of the non-resident.
- Any other person, whether resident or non-resident, who has acquired a capital asset in India by means of a transfer.
Independent brokers dealing through a non-resident broker are excluded
A broker in India who does not deal directly with, or on behalf of, a non-resident principal, but instead deals with or through a non-resident broker, is not deemed an agent under this section for those transactions, provided: the transactions are carried on in the ordinary course of business through the first-mentioned broker; and the non-resident broker carries on those transactions in the ordinary course of his own business, and not as a principal.
A hearing is required before agent status is fixed
A person cannot be treated as the agent of a non-resident unless he has had an opportunity of being heard by the Assessing Officer on his liability to be treated as such.
Meaning of "business connection"
For the purposes of Section 306, "business connection" has the meaning assigned to it in section 9(9)(a).
Frequently asked questions
Can any person who deals with a non-resident be treated as their agent?
Section 306(1) covers employees, people with a business connection, people through whom the non-resident receives income, trustees, and anyone who has acquired a capital asset in India by transfer - but Section 306(3) requires the Assessing Officer to give that person a hearing before treating them as an agent.
Is an Indian broker automatically the agent of a non-resident broker they deal with?
No - Section 306(2) excludes a broker who deals only through a non-resident broker (not directly with a non-resident principal), provided the transactions are in the ordinary course of business on both sides and the non-resident broker is not acting as a principal.
Related sections
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Talk to our team about non-resident agent tax obligationsLast updated 9 September 2026