80O Income Tax Act - Deduction in respect of royalties, etc., from certain foreign enterprises

Section 80-O of Income Tax Act 1961 - Deduction in respect of royalties, etc., from certain foreign enterprises

1 ,2 Where the gross total income of an assessee, being an Indian company 3 or a person (other than a company) who is resident in India, includes 4 any income received by the assessee from the Government of a foreign State or foreign enterprise in consideration for the use outside India of any patent, invention, design or registered trade mark 5 *** 6 and such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, or having been converted into convertible foreign exchange outside India, is brought into India, by or on behalf of the assessee in accordance with any law for the time being in force for regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to the provisions of this section, 7 a deduction of an amount equal to-

(i) forty per cent. for an assessment year beginning on the 1st day of April, 2001;

(ii) thirty per cent. for an assessment year beginning on the 1st day of April, 2002;

(iii) twenty per cent. for an assessment year beginning on the 1st day of April, 2003;

(iv) ten per cent. for an assessment year beginning on the 1st day of April, 2004,

of the income so received in, or brought into, India, in computing the total income of the assessee and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year:

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9 10 Provided that such income is received in India within a period of six months from the end of the previous year, or 11 within such further period as the competent authority may allow in this behalf:

12 Provided further that no deduction under this section shall be allowed unless the assessee furnishes a certificate, in the prescribed form, along with the return of income, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.

13 Explanation.-For the purposes of this section,-
(i) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the law for the time being in force for regulating payments and dealings in foreign exchange;

9 (ii) "foreign enterprise" means a person who is a non-resident;

14 (iii) services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India;

15 (iv) "competent authority" means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange.

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1. Subs. by Act 32 of 1971, s. 21, for section 80-O (w.e.f. 1-4-1972). Earlier was inserted by Act 13 of 1966, s. 17 (w.e.f. 1- 4-1966). Section 80N was inserted in place of section 85B which was deleted by the Finance (No. 2) Act, 1967 (20 of 1967), s. 33 and the Third Schedule (w.e.f. 1-4-1968).
2. Subs. by Act 20 of 1974, s. 9, for "(1) Where the gross total income of an assessee, being an Indian company or a person (other than a company) who is resident in India," (w.e.f. 1-4-1975).
3. Ins. by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992).
4. Subs. by Act 26 of 1997, s. 29, for certain words (w.e.f. 1-4-1998). Earlier amended by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992).
5. The words "under an agreement approved in this behalf by the Chief Commissioner or the Director General;" omitted by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992).Earlier these words were substituted by Act 26 of 1988, s. 26 (w.e.f. 1-4-1989).
6. Subs. by Act 26 of 1988, s. 26, for certain words (w.e.f. 1-4-1988). Earlier section was amended by Act 20 of 1974, s. 9 (w.e.f. 1-4-1972). Later on amended by Act 21 of 1984, s. 18 (w.e.f. 1-4-1985).
7. Subs. by Act 10 of 2000, s. 41, for certain words (w.e.f. 1-4-2001).
8. The provisos omitted by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992).
9. Ins. by Act 11 of 1987, s. 36 (w.e.f. 1-4-1988).
10. Subs. by Act 49 of 1991, s. 34, for "Provided also" (w.e.f. 1-4-1992).
11. Subs. by Act 27 of 1999, s. 53, for certain words (w.e.f. 1-6-1999).earlier amended by Act 20 of 1974, s. 9 (w.e.f. 1-4-1975).
12. Ins. by s. 53, ibid. (w.e.f. 1-6-1999).
13. Subs. by Act 32 of 1985, s. 36, for Explanation (w.e.f. 1-4-1986).
14. Ins. by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992).
15. Ins. by Act 27 of 1999, s. 53 (w.e.f. 1-6-1999).
16. Sub-section (2) omitted by Act 20 of 1974, s. 9 (w.e.f. 1-4-1975).