Rule 13: Significant economic presence thresholds
Rule 13 supplies the prescribed payment amount and user count for the two significant economic presence limbs in section 9(9)(d). Businesses must identify which limb and which India-connected activity they are assessing.
Official notified Income-tax Rules, 2026Need advice on Rule 13?
This article is for general information. Read the official Rules and applicable Act amendments, including the Taxation and Other Laws (Amendment) Act, 2026. If you need professional advice for your situation, contact Bizeneed.
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Bare law
Rule 13 - Threshold for purposes of significant economic presence
(1) For the purposes of section 9(9)(d)(i), the aggregate amount of payments from transactions carried out by a non-resident with any person in India, in respect of any goods, service or property including provision for download of data or software in India during the tax year, shall be two crore rupees.
(2) For the purposes of section 9(9)(d)(ii), the number of users with whom systematic and continuous business activities are solicited or who are engaged in interaction shall be ₹ 300000.
Introduction
The payment test concerns covered transactions during the tax year; the user test concerns the stated systematic and continuous activities or interaction. These measures are not interchangeable and do not themselves calculate taxable profit.
Rule breakdown
Identify the transaction-payment measure
Sub-rule (1) concerns aggregate payments from transactions carried out by a non-resident with any person in India in respect of goods, services or property, including provision for download of data or software in India, during the tax year.
Reconcile the covered payments and tax-year period. The ₹2 crore prescribed amount is not a profit figure, a tax rate, or a replacement for the parent Act’s conditions.
Keep the user measure separate
Sub-rule (2) deals with the number of users with whom the stated systematic and continuous business activities are solicited or who are engaged in interaction. Its operative unit is users.
The Gazette prints a rupee symbol before “300000” in this user-count sub-rule. The quotation below retains that printed text; the explanation treats the number as 300,000 users, consistent with the express words “number of users”. This does not turn the user limb into a second monetary payment test.
Read the rule with section 9
The two sub-rules refer to different clauses of section 9(9)(d). Review the applicable clause and its India connection instead of assuming both measures must always be met together.
The rule supplies threshold figures. Questions about covered activity, attribution of income and other applicable legal conditions require the Act and the actual facts; crossing a figure is not a direction to tax all worldwide revenue.
Illustrative records review
Hypothetical: a non-resident maintains one ledger for covered India-connected transaction payments and a separate dataset for users relevant to its activities or interaction. The payment ledger is compared with the payment limb and the user dataset with the user limb. Adding the rupee amount to the user count would not be a meaningful computation.
This illustration describes record separation only. It does not establish that any particular customer, account or transaction must be counted without checking the relevant statutory facts.
Prepare the business assessment file
Identify the non-resident and the business model; map the covered transaction or activity; document the tax-year payment reconciliation and relevant user evidence; and review the section 9 conditions and resulting income analysis. Preserve assumptions about geography and the identification of users so that the conclusion can be checked.
Key takeaways
Payment amount
Sub-rule (1) prescribes ₹2 crore for the transaction-payment limb in section 9(9)(d)(i).
User count
Sub-rule (2) prescribes 300,000 users for the activity or interaction limb in section 9(9)(d)(ii).
Read the parent provision
Apply the statutory conditions in section 9 rather than treating a threshold figure as an independent tax charge.
Practical checklist
- Keep payments and user counts in separate schedules.
- Map each schedule to the relevant section 9 limb.
- Record the relevant period and evidence of the India connection.
Avoid
- Do not describe 300,000 users as ₹300,000 of payments.
- Do not treat the prescribed amount as a profit margin or tax rate.
- Do not claim every worldwide receipt becomes taxable solely from these figures.
FAQs
What payment amount does Rule 13 prescribe?
Sub-rule (1) prescribes two crore rupees for the transaction-payment limb referred to in section 9(9)(d)(i). The parent provision determines how that amount is applied.
Is 300,000 a rupee amount or a user count?
The text expressly concerns the number of users. It is a count of 300,000 users; the rupee symbol appearing in the Gazette quotation should not be treated as changing that unit.
Does Rule 13 calculate the taxable income?
No. It specifies the two threshold measures. The applicable Act provisions and facts determine the income consequences.
Glossary
- Transaction-payment limb
- The significant economic presence limb for which sub-rule (1) prescribes the aggregate payment amount.
- User limb
- The activity or interaction limb for which sub-rule (2) prescribes a number of users.