{"act":{"id":"finance-act-2020","short_title":"The Finance Act, 2020","long_title":"An Act to give effect to the financial proposals of the Central Government for the financial year 2020-2021.","act_number":null,"act_year":2020,"enact_date":null,"enforcement_date":null,"ministry":"Ministry of Finance","department":"Department of Revenue","jurisdiction":"CENTRAL","unit":"section","section_count":157,"in_force":true,"spent":false,"spent_note":null,"duplicate_of":null,"text_source":"published","scan_url":null,"url":"https://indiacode.ecourtsindia.com/finance-act-2020/"},"unit":"section","section":{"number":"5","heading":"Amendment of Section 9","text":"Amendment of section 9. 5. In section 9 of the Income-tax Act, in sub-section (1),— (a) | in clause (i),— (i) | in Explanation 1, in clause (a), for the words \"in the case of a business\", the words \"in the case of a business, other than the business having business connection in India on account of significant economic presence,\" shall be substituted with effect from the 1st day of April, 2022; (ii) | Explanation 2A shall be omitted with effect from the 1st day of April, 2021 and the following Explanation shall be inserted with effect from the 1st day of April, 2022, namely:— 'Explanation 2A.—For the removal of doubts, it is hereby declared that the significant economic presence of a non-resident in India shall constitute \"business connection\" in India and \"significant economic presence\" for this purpose, shall mean— (a) | transaction in respect of any goods, services or property carried out by a non-resident with any person in India including provision of download of data or software in India, if the aggregate of payments arising from such transaction or transactions during the previous year exceeds such amount as may be prescribed; or (b) | systematic and continuous soliciting of business activities or engaging in interaction with such number of users in India, as may be prescribed: Provided that the transactions or activities shall constitute significant economic presence in India, whether or not— (i) | the agreement for such transactions or activities is entered in India; or (ii) | the non-resident has a residence or place of business in India; or (iii) | the non-resident renders services in India: Provided further that only so much of income as is attributable to the transactions or activities referred to in clause (a) or clause (b) shall be deemed to accrue or arise in India.'; (iii) | after Explanation 3, the following Explanation shall be inserted with effect from the 1st day of April, 2021, namely:— \"Explanation 3A.—For the removal of doubts, it is hereby declared that the income attributable to the operations carried out in India, as referred to in Explanation 1, shall include income from— (i) | such advertisement which targets a customer who resides in India or a customer who accesses the advertisement through internet protocol address located in India; (ii) | sale of data collected from a person who resides in India or from a person who uses internet protocol address located in India; and (iii) | sale of goods or services using data collected from a person who resides in India or from a person who uses internet protocol address located in India.\"; (iv) | after Explanation 3A as so inserted, the following proviso shall be inserted with effect from the 1st day of April, 2022, namely:— \"Provided that the provisions contained in this Explanation shall also apply to the income attributable to the transactions or activities referred to in Explanation 2A.\"; (v) | in Explanation 5,— (I) | in the second proviso, after the words, brackets and figures \"Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014\", the words \"prior to their repeal\" shall be inserted; (II) | after the second proviso, the following proviso shall be inserted, namely:— \"Provided also that nothing contained in this Explanation shall apply to an asset or a capital asset, which is held by a non-resident by way of investment, directly or indirectly, in Category-I foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992).\"; (b) | in clause (vi), in Explanation 2, in clause (v), the words \", but not including consideration for the sale, distribution or exhibition of cinematographic films\" shall be omitted with effect from the 1st day of April, 2021.","html":"<p><b>Amendment of section 9.</b></p><p><b>5.</b> In section 9 of the Income-tax Act, in sub-section (1),—</p><div class=\"tablewrap\"><table class=\"dtable\"><tr><td>(<i>a</i>)</td><td></td><td>in clause (<i>i</i>),—</td></tr></table></div><div class=\"tablewrap\"><table class=\"dtable\"><tr><td>(<i>i</i>)</td><td></td><td>in <i>Explanation 1</i>, in clause (<i>a</i>), for the words \"in the case of a business\", the words \"in the case of a business, other than the business having business connection in India on account of significant economic presence,\" shall be substituted with effect from the 1st day of April, 2022;</td></tr><tr><td>(<i>ii</i>)</td><td></td><td><i>Explanation 2A</i> shall be omitted with effect from the 1st day of April, 2021 and the following <i>Explanation</i> shall be inserted with effect from the 1st day of April, 2022, namely:—</td></tr><tr><td></td><td></td><td>'<i>Explanation 2A.</i>—For the removal of doubts, it is hereby declared that the significant economic presence of a non-resident in India shall constitute \"business connection\" in India and \"significant economic presence\" for this purpose, shall mean—</td></tr></table></div><div class=\"tablewrap\"><table class=\"dtable\"><tr><td>(<i>a</i>)</td><td></td><td>transaction in respect of any goods, services or property carried out by a non-resident with any person in India including provision of download of data or software in India, if the aggregate of payments arising from such transaction or transactions during the previous year exceeds such amount as may be prescribed; or</td></tr><tr><td>(<i>b</i>)</td><td></td><td>systematic and continuous soliciting of business activities or engaging in interaction with such number of users in India, as may be prescribed:</td></tr></table></div><div class=\"tablewrap\"><table class=\"dtable\"><tr><td></td><td></td><td><b>Provided</b> that the transactions or activities shall constitute significant economic presence in India, whether or not—</td></tr></table></div><div class=\"tablewrap\"><table class=\"dtable\"><tr><td>(<i>i</i>)</td><td></td><td>the agreement for such transactions or activities is entered in India; or</td></tr><tr><td>(<i>ii</i>)</td><td></td><td>the non-resident has a residence or place of business in India; or</td></tr><tr><td>(<i>iii</i>)</td><td></td><td>the non-resident renders services in India:</td></tr></table></div><div class=\"tablewrap\"><table class=\"dtable\"><tr><td></td><td></td><td><b>Provided further</b> that only so much of income as is attributable to the transactions or activities referred to in clause (<i>a</i>) or clause (<i>b</i>) shall be deemed to accrue or arise in India.';</td></tr><tr><td>(<i>iii</i>)</td><td></td><td>after <i>Explanation 3</i>, the following <i>Explanation</i> shall be inserted with effect from the 1st day of April, 2021, namely:—</td></tr><tr><td></td><td></td><td>\"<i>Explanation 3A</i>.—For the removal of doubts, it is hereby declared that the income attributable to the operations carried out in India, as referred to in <i>Explanation 1</i>, shall include income from—</td></tr></table></div><div class=\"tablewrap\"><table class=\"dtable\"><tr><td>(<i>i</i>)</td><td></td><td>such advertisement which targets a customer who resides in India or a customer who accesses the advertisement through internet protocol address located in India;</td></tr><tr><td>(<i>ii</i>)</td><td></td><td>sale of data collected from a person who resides in India or from a person who uses internet protocol address located in India; and</td></tr><tr><td>(<i>iii</i>)</td><td></td><td>sale of goods or services using data collected from a person who resides in India or from a person who uses internet protocol address located in India.\";</td></tr><tr><td>(<i>iv</i>)</td><td></td><td>after <i>Explanation 3A</i> as so inserted, the following proviso shall be inserted with effect from the 1st day of April, 2022, namely:—</td></tr><tr><td></td><td></td><td>\"<b>Provided</b> that the provisions contained in this <i>Explanation</i> shall also apply to the income attributable to the transactions or activities referred to in <i>Explanation 2A</i>.\";</td></tr><tr><td>(<i>v</i>)</td><td></td><td>in <i>Explanation 5</i>,—</td></tr></table></div><div class=\"tablewrap\"><table class=\"dtable\"><tr><td>(<i>I</i>)</td><td></td><td>in the second proviso, after the words, brackets and figures \"Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014\", the words \"prior to their repeal\" shall be inserted;</td></tr><tr><td>(<i>II</i>)</td><td></td><td>after the second proviso, the following proviso shall be inserted, namely:—</td></tr><tr><td></td><td></td><td>\"<b>Provided also</b> that nothing contained in this <i>Explanation</i> shall apply to an asset or a capital asset, which is held by a non-resident by way of investment, directly or indirectly, in Category-I foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992).\";</td></tr></table></div><div class=\"tablewrap\"><table class=\"dtable\"><tr><td>(<i>b</i>)</td><td></td><td>in clause (<i>vi</i>), in <i>Explanation 2</i>, in clause (<i>v</i>), the words \", but not including consideration for the sale, distribution or exhibition of cinematographic films\" shall be omitted with effect from the 1st day of April, 2021.</td></tr></table></div>","words":636,"text_source":"published"},"classification":[],"instruments":[],"judgments":[],"corresponds_to":[],"url":"https://indiacode.ecourtsindia.com/finance-act-2020/section/5/","note":null,"source_note":"Harvested from the Income Tax Department's own portal at incometaxindia.gov.in, which publishes the Finance Acts section by section. India Code carries none of them: its Central community holds the Acts that stand as general law, and a Finance Act is an amending and rate-fixing instrument.","judgments_note":"Judgment holdings are the ratio decidendi as extracted from the order by eCourts India, reproduced unaltered. Reported judgments only.","licence":"Published with commentary and other original matter under s.52(1)(q)(ii), Copyright Act 1957."}