Rule 45: Electronics facility company conditions
Rule 45 sets conditions for the resident company linked to the specified non-resident income entry in section 61. It addresses the electronics facility, notified scheme and continued eligibility of that resident company.
Official notified Income-tax Rules, 2026Need advice on Rule 45?
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.
On this page
Bare law
Rule 45 - Conditions to be fulfilled by a resident company for purposes of section 61(2) [Table: Sl. No. 6]
(1) For the purposes of section 61(2) [Table: Sl. No. 6], a resident company shall, — (a) be establishing or operating electronics manufacturing facility or a connected facility for manufacturing or producing electronic goods, article or thing in India under any scheme notified by the Central Government in the Ministry of Electronics and Information Technology and as modified from time to time; and (b) not become ineligible for the such scheme at any time of the tax year for which tax is to be calculated for the income of the non-resident.
(2) For the purposes of this rule, ‗electronics goods‘ shall mean goods covered under any scheme referred to in sub-rule (1), including their supply chain ecosystem.
Rule breakdown
Identify the resident company’s facility
The resident company must be establishing or operating an electronics manufacturing facility, or a connected facility for manufacturing or producing electronic goods, articles or things in India.
Identify the actual facility and its role in the arrangement. A general description as a technology company does not demonstrate the stated condition.
Match the notified electronics scheme
The facility must fall under a scheme notified by the Central Government in the Ministry of Electronics and Information Technology, as modified from time to time.
Keep the applicable scheme and the company’s relevant eligibility evidence. Check current modifications rather than relying only on the scheme as originally announced.
Maintain eligibility throughout the relevant tax year
The resident company must not become ineligible for the scheme at any time during the tax year for which the non-resident’s income tax is to be calculated.
This is a full-year condition expressed by reference to the non-resident’s relevant tax year. A one-date confirmation at the start or end of the year may not establish it.
Electronics goods and the supply chain
The definition covers goods within the relevant scheme, including their supply-chain ecosystem. Match the goods and connected activity to the actual scheme coverage.
The reference to an ecosystem should not be treated as making every supplier or service arrangement eligible independently of the scheme and parent section.
Coordinate the evidence with the non-resident computation
Retain the facility description, notified scheme, eligibility approvals or records and any change or loss-of-eligibility communications. Provide the relevant evidence to the team assessing the non-resident’s section 61 position.
The rule sets resident-company conditions for that linked provision. It does not independently grant a tax holiday to the resident company or settle all of the non-resident’s statutory conditions.
Key takeaways
Resident company conditions
The rule tests the linked resident electronics facility company.
Notified scheme
The facility and goods must be connected to the applicable notified scheme.
Full-year eligibility
No loss of scheme eligibility at any time in the relevant tax year.
Practical checklist
- Identify the actual electronics or connected facility.
- Keep the current notified scheme and eligibility records.
- Review changes in eligibility throughout the relevant tax year.
Avoid
- Do not assume all technology businesses qualify.
- Do not treat this condition rule as an independent tax holiday.
FAQs
Is the rule itself a tax exemption for the resident company?
No. It specifies resident-company conditions for the identified section 61 non-resident income provision.
Is eligibility only at year end enough?
The text requires the company not to become ineligible at any time during the relevant tax year.
Can supply-chain goods be covered?
Yes, the definition includes the supply-chain ecosystem within the goods covered by the relevant scheme; the scheme and other conditions must still be met.
Glossary
- Notified scheme
- The relevant scheme notified by the Central Government in the Ministry of Electronics and Information Technology, as modified.
- Connected facility
- A facility connected with the manufacturing or production activity described in Rule 45(1)(a).