Section 61
Section 61: presumptive computation of income for certain non-resident businesses
Section 61 sets a table of six specified businesses run by non-residents or foreign companies - shipping, cruise ships, aircraft operation, turnkey power-project construction, mineral-oil-related services, and electronics-manufacturing-related services/technology supply - each taxed on a fixed percentage of gross receipts rather than on actual computed profit. It corresponds to the group of provisions taxpayers used to know as Sections 44B, 44BBA, 44BB and similar sections of the old Act.
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.
The six categories and their presumptive rates
| Sl. No. | Specified business | Assessee | Deemed profit |
|---|---|---|---|
| 1 | Operation of ships (other than cruise ships) | Non-resident | 7.5% of amounts received/receivable for carriage of passengers, livestock, mail or goods shipped at ports in India, plus amounts received/deemed received in India for shipments at ports outside India (including demurrage/handling charges) |
| 2 | Operation of cruise ships (subject to prescribed conditions) | Non-resident | 20% of amounts (paid/payable and received/deemed received) for carriage of passengers only |
| 3 | Operation of aircraft | Non-resident | 5% of amounts received/receivable for carriage of passengers, livestock, mail or goods from India, plus amounts received/deemed received in India for carriage from outside India |
| 4 | Civil construction, erection, testing or commissioning of plant/machinery for a Central Government-approved turnkey power project | Foreign company | 10% of the amount paid or payable for such construction/erection/testing/commissioning |
| 5 | Providing services/facilities (including supply of plant and machinery on hire) for prospecting, extraction or production of mineral oils | Non-resident | 10% of amounts (paid/payable, and received/deemed received in India) for such services/facilities used in India or outside India |
| 6 | Providing services or technology to a resident company for setting up an electronics manufacturing facility, or for manufacturing/producing electronic goods in India | Non-resident | 25% of amounts paid/payable or received/deemed received on account of providing such services or technology |
When actual (lower) profit can be claimed instead
For the turnkey power-project business (Sl. No. 4) and the mineral-oil services business (Sl. No. 5), Section 61(3) allows the specified assessee to claim that actual profits are lower than the presumptive figure, but only if the assessee keeps and maintains books of account under Section 62 and gets the accounts audited with a report furnished under Section 63.
Other computational rules
- No loss, allowance or deduction otherwise available under the Act can be set off against income computed under this section (Section 61(4)).
- The written down value of assets used in the specified business is computed as if depreciation had actually been claimed and allowed each year (Section 61(5)).
- For the mineral-oil services business (Sl. No. 5), this section does not apply where Section 54, 59, 207 or 527 already applies to compute the relevant profits or income (Section 61(6)); "plant" for that category includes ships, aircraft, vehicles, drilling units, and scientific apparatus and equipment used for the business (Section 61(7)).
- For the electronics-manufacturing services category (Sl. No. 6), the resident company must be establishing/operating the facility under a scheme notified by the Central Government (Ministry of Electronics and Information Technology) and must satisfy other prescribed conditions (Section 61(8)); Sections 59 and 207 do not apply to these amounts (Section 61(9)).
Frequently asked questions
What percentage of receipts is taxed for a non-resident shipping company under Section 61?
7.5% of the relevant receipts for ordinary shipping (Sl. No. 1), and 20% for a cruise ship business (Sl. No. 2).
What is the presumptive rate for a non-resident aircraft operator?
5% of the specified receipts from carriage of passengers, livestock, mail or goods, under Section 61(2) Table Sl. No. 3.
Can a non-resident claim a lower actual profit instead of the deemed percentage?
Only for the turnkey power-project business (Sl. No. 4) and the mineral-oil services business (Sl. No. 5), and only if books of account are maintained under Section 62 and the accounts are audited under Section 63, as required by Section 61(3).
Related sections
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