Chapter IV - Computation of Total Income

Section 61

Section 61: presumptive computation of income for certain non-resident businesses

Section 61 sets out six specified businesses carried on by non-residents or foreign companies: ordinary shipping, cruise ships, aircraft, approved turnkey power projects, mineral-oil services, and qualifying electronics-related services or technology. Business profits are computed as a specified percentage of the statutory receipt base for the applicable row; the income-tax rate is a separate calculation.

Official text

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Need advice on Section 61?

This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.

Statutory text

Bare law

(1) The provisions of sections 26 to 54, to the extent contrary to this section, shall not apply to the manner of computation of profits and gains of the specified business in sub-section (2).

(2) The profits and gains of any specified business as mentioned in column B of the Table below, carried on by a specified assessee as mentioned in column C of the said Table during a tax year, shall be computed in the manner specified in column D thereof, and shall be deemed to be the profits and gains of such business of such assessee chargeable to tax for the said tax year under the head “Profits and gains of business or profession”.

Sl. No.	Specified business	Specified assessee	Profits and gains of business or profession
1	Business of operation of ships, other than cruise ships referred to in Serial number 2.	Non-resident.	7.5% of (A+B), where,— A = sum on account of carriage of passengers, livestock, mail or goods shipped at any port in India, whether paid or payable, in or outside India, to the assessee or any other person on his behalf (including demurrage, handling or other similar charges); B = sum on account of carriage of passengers, livestock, mail or goods shipped at any port outside India, whether received or deemed to be received in India, by the assessee or any other person on his behalf (including demurrage, handling or other similar charges).
2	Business of operation of cruise ships (subject to the conditions as may be prescribed).	Non-resident.	20% of (A+B), where,— A = sum on account of carriage of passengers, paid or payable to the assessee or any other person on his behalf; B = sum on account of carriage of passengers received or deemed to be received by the assessee or any other person on his behalf.
3	Business of operation of aircraft.	Non-resident.	5% of (A+B), where,— A = sum on account of carriage of passengers, livestock, mail or goods from any place in India, paid or payable (in or outside India) to the assessee or any other person on his behalf; B = sum on account of carriage of passengers, livestock, mail or goods from any place outside India, received or deemed to be received in India, by the assessee or any other person on his behalf.
4	Business of civil construction or erection or testing or commissioning, of plant or machinery, in connection with a turnkey power project, approved by the Central Government.	Foreign company.	10% of the amount towards such civil construction, erection, testing, or commissioning, paid or payable, to the assessee or to any other person on his behalf, whether in or outside India.
5	Business of providing services or facilities (including supply of plant and machinery on hire) for prospecting, extraction or production of mineral oils.	Non-resident.	10% of (A+B), where,— A = sum on account of business of providing services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils in India, paid or payable (in or outside India), to the assessee or any other person on his behalf; B = sum on account of business of providing services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils outside India, received or deemed to be received in India, by the assessee or any other person on his behalf.
6	Business of providing services or technology in India, for the purposes of setting up an electronics manufacturing facility or in connection with manufacturing or producing electronic goods, article or thing in India to a resident company.	Non-resident.	25% of (A + B), where,— A = the amount paid or payable to the non-resident assessee or to any person on his behalf on account of providing services or technology; B = the amount received or deemed to be received by the non-resident assessee or on behalf of non-resident assessee on account of providing services or technology.

(3) For the purposes of sub-section (2) (Table: Sl. Nos. 4 and 5) the specified assessee may claim that the profits actually earned from the specified business are lower than the business profits computed under sub-section (2), if,— (a) he keeps and maintains such books of account and other documents as required under section 62; and (b) gets his accounts audited and furnish a report of such audit as required under section 63.

(4) Any loss, allowance or deduction allowable under the provisions of this Act shall not be allowed against the income computed in the manner specified in sub-section (2).

(5) The written down value of any asset used for the purposes of specified business or profession shall be computed, as if the assessee mentioned in column C of the Table in sub-section (2) had claimed and was actually allowed depreciation thereon for each of the relevant tax years.

(6) For the purposes of sub-section (2) (Table: Sl. No. 5) the provisions of this section shall not apply where the provisions of section 54 or 59 or 207 or 527 apply for the purposes of computing profits and gains or any other income referred to in the said sections.

(7) For the purposes of sub-section (2) (Table: Sl. No. 5), “plant” includes ships, aircrafts, vehicles, drilling units, scientific apparatuses and equipments used for the purposes of the specified business.

(8) For the purposes of sub-section (2) (Table: Sl. No. 6), resident company shall satisfy the following:— (a) it is establishing or operating electronics manufacturing facility or a connected facility for manufacturing or producing electronic goods, article or thing in India, under a scheme notified by the Central Government in the Ministry of Electronics and Information Technology; and (b) it satisfies the conditions as may be prescribed in this behalf.

(9) The provisions of sections 59 and 207 shall not apply to amounts referred to in sub-section (2) (Table: Sl. No. 6).

Introduction

Section 61 deems the profits of six specified non-resident business categories using an activity-specific percentage of the statutory receipt base. These percentages compute taxable business profits; they are not the final income-tax rates.

For the electronics-services category, the taxpayer is the non-resident supplier. The resident company receiving the services or technology must meet the separate conditions in subsection (8).

Key takeaways

Identify the taxpayer and activity

Five table rows specify a non-resident; the approved turnkey power-project row specifies a foreign company. The business description and receipt base must both fit the selected row.

Presumed profit is not tax payable

The table determines the business income component. The applicable tax rate is a separate computation.

Lower-profit route is limited

Only the turnkey power-project and mineral-oil rows have the subsection (3) lower-profit route, with books under section 62 and audit under section 63.

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)).

Step-by-step flow for applying Section 61

1
Is the business one of those listed in the Table in Section 61(2)?
The Table covers operation of ships, cruise ships and aircraft, civil construction or commissioning for approved turnkey power projects, services or plant hire for mineral oils, and services or technology for electronics manufacturing for a resident company. Column C names the specified assessee for each.
- No: Section 61 does not apply.
- Yes: Go to the next step.
2
Is the assessee the specified assessee for that serial number?
- No: Compute income under the normal provisions.
- Yes: Go to the next step.
3
Identify the receipts (A and B) the formula uses
For example, for ships: sums for carriage shipped at any Indian port (A) and sums received or deemed received in India for carriage shipped at ports outside India (B), including demurrage and handling charges.
4
Apply the Table percentage to compute deemed profits
For example, 7.5% for ships other than cruise ships, 20% for cruise ships and 5% for aircraft, as the Table specifies.
5
Does the assessee want to claim lower actual profits where the Table allows it?
Only Sl. Nos. 4 and 5 (turnkey power projects and mineral oil services) allow this under Section 61(3), and only if books are kept under Section 62 and audited under Section 63. Otherwise no loss, allowance or deduction is allowed against the deemed income (Section 61(4)).

Practical checklist

Do

Identify the exact activity and taxpayer row before applying a percentage.
Reconcile Indian-connected amounts paid, payable, received or deemed received to that row's base.
For any lower-profit claim permitted by the section, maintain books and obtain the required audit.

Avoid

Do not use a shipping percentage for an oilfield or aircraft activity.
Do not claim ordinary deductions again against a profit already computed under the presumptive row.

Illustrative example

Worked example: a foreign shipping line

Hypothetical facts (illustration only, not a real taxpayer): A non-resident shipping company carries goods shipped at Indian ports and earns ₹40 crore of freight (including demurrage and handling charges) for the tax year. It carries no cargo shipped at ports outside India that is received in India.

Category
Operation of ships other than cruise ships is in the Table in Section 61(2).
Compute A + B
A = ₹40 crore; B = nil.
Deemed profit
7.5% of ₹40 crore = ₹3 crore is deemed to be its business income from this activity.

Outcome

₹3 crore is taxed as business income without detailed expense computation.
Treaty and other provisions that may affect the final position need to be checked separately.

Glossary

Presumptive income: Profit deemed by the activity-specific Section 61 table instead of ordinary expense-by-expense computation.
Specified assessee: The taxpayer category named for a particular presumptive business row.

Frequently asked questions

What presumed-profit percentage applies to ordinary shipping and cruise ships?

Section 61 deems business profits at 7.5% of the row 1 receipt base for ordinary shipping and 20% of the row 2 base for cruise ships, subject to its conditions. These are profit percentages, not final tax rates.

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).

Is the resident electronics manufacturer the presumptive taxpayer in row 6?

No. Row 6 specifies the non-resident supplier of services or technology. The resident company is the recipient, and it must satisfy subsection (8), including the notified-scheme and prescribed conditions.

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Last updated 10 October 2026

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