Page 20 - Budget_2020

Union Budget 2020
Indian Income – Scope Expanded
 To provide that the following shall be deemed as Indian revenue:
• Income from advertisement targeting an Indian customer or a customer who accesses the
advertisement through internet protocol address located in India
• Sale of data collected from a resident or from a person who uses internet protocol address located in
India and
• Sale of goods or services using data collected from a resident or from a person who uses internet
protocol address located in India

From AY 21-22 except for attribution of income to SEP transaction, in which case it would be effective from
AY 22-23

India’s right and just share of tax is preserved with the above proposals. The CBDT issued a public consultation
document on 18.04.2019 on attribution of profits which laid the ground rules for the above proposals

Royalty to Include Film Rights
Even though the DTAAs allowed India to tax the sale, distribution of exhibition of cinematographic films, by
virtue of the domestic law, the income of the non-residents from the sale, distribution or exhibition of
cinematographic films was not taxed
The definition of royalty as per explanation 2 of Sec 9(1)(vi) is proposed to be amended to remove the words
“but not including consideration for the sale, distribution or exhibition of cinematographic films”

AY 21-22 and subsequent AYs

This would increase the tax base for India. India always had the right under applicable DTAAs which could
not be enforced in the light of a beneficial domestic law - which is now rectified.

CBDT Empowered - Sec 295
Board is empowered to make rules for the manner and procedure in which the income shall be arrived at
in the case of:
i. operations carried out in India by a non-resident (effective from AY 21 -22)
ii. transaction or activities of a non-resident (effective from AY 22-23)

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