Section 44BBB of Income Tax Act

FOREIGN COMPANIES ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION ETC. IN CERTAIN TURNKEY POWER PROJECTS – SECTION 44BBB OF INCOME TAX ACT

SECTION 44BBB OF INCOME TAX ACT – ELIGIBLE ASSESSEE

A foreign company,  which is engaged in the following activities in connection with a turnkey power project approved by the Central Government (through Department of Power in Ministry of Energy in terms of Circular 552) , may opt for presumptive taxation provisions of Section 44BBB of the Income Tax Act : –

• The business of civil construction in connection with the turnkey project ; or
• Erection of plant or machinery in connection with the turnkey project ; or
• Testing or commissioning of such plant and machinery in connection with the turnkey project

PRESUMPTIVE INCOME

Once the aforesaid conditions are satisfied, the following provisions shall apply : –

• Taxable income of the non-resident shall be equal to 10% (i.e., presumptive income) of the amount paid or payable .
• Such amount may be paid or payable to the assessee or to any person on his behalf,
• The amount may be paid or payablein India or outside India.

DEDUCTION OF ANY EXPENDITURE

No deduction of any expenditure , which is incurred under   Section 28 to 44AA would be allowed , while computing presumptive income of the non-resident u/s 44BBB.

OPTION TO CLAIM LOWER PROFITS – Section 44BBB OF INCOME TAX ACT

1. An assessee may claim lower income than the presumptive rate of 10%, if such assessee :
   1. Keeps and maintains books of account under section 44AA(2); and
   2. Gets books of accounts audited and furnish a report of such audit under section 44AB.

Note: The assessment in all such cases shall be done by the Assessing Officer under section 143(3).