Amendment of Section 9

In force As on 10 Oct 2026

Ministry Finance Cited by 1 provision

Section 5 of the Finance Act, 2020 deals with amendment of Section 9. 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

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.
Section 5, The Finance Act, 2020.

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Referred to by 1

s. 31 Substitution of new section for section 72AA

Questions about Section 5

What does Section 5 of the Finance Act deal with?

Section 5 of the Finance Act is headed "Amendment of Section 9". 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

How do I find court cases under Section 5 of the Finance Act?

In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Finance Act 2020 5, section 5 Finance Act 2020, section 5 of the Finance Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome.

What should I read with Section 5 of the Finance Act, and has it changed?

Its own text turns on section 9 (Amendment of Section 11), Income-tax Act 9 (Income deemed to accrue or arise in India), so none of them can safely be read on its own. 1 other provision in this corpus refers back to it.

When was the Finance Act enacted?

Finance Act was enacted in 2020. India Code records no commencement date for it. It is in force as at the date shown on this page.

Other sections of this Act

2. Income-tax5875 words
7. Amendment of Section 102233 words
53. Insertion of new sections 115BAC and 115BAD1625 words
153. Amendment of Act 28 of 20161366 words
116. Substitution of new section for section 8B1203 words
95. Amendment of Section 206C1116 words

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(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:

(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).";