Threshold for the Purpose of Significant Economic Presence

The CBDT notified a new Rule 11UD under the Income Tax Rules, 1962 (herein referred to as the “Rule”) which will come into effect from 1st April,2022. It prescribes the threshold limits for defining whether an entity has a significant economic presence in India for the purpose of Explanation 2A to clause (i) of sub-section (1) of section 9 of the Income Tax Act,1961 (herein referred to as the “Act”):

  • The amount of aggregate of payments arising from transaction or transactions 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 during the previous year, shall be two crore rupees;
  • The number of users with whom systematic and continuous business activities are solicited or who are engaged in interaction shall be three lakhs.