Section 207
Tax on dividends, royalty and fees for technical service in case of foreign companies.
About this Act
An Act to consolidate and amend the law relating to income-tax.
(1) The income-tax payable on the total income of a non-resident (not being a company) or of a foreign company, which includes any income specified in the column B of the Table below, shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B.
TABLE
Sl. No. | Income | Rate of Income-tax payable
A | B | C
1. | Dividend [other than dividends specified against serial number 2]. | 20%
2. | Dividend received from a unit in an International Financial Services Centre. | 10%
3. | Interest received from Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency not being interest referred to against serial numbers 4 and 5. | 20%
4. | Interest received from an infrastructure debt fund referred to in Schedule VII (Table: Sl. No. 46). | 5%
5. | Interest of the nature and extent referred to in section 393(2) (Table: Sl. Nos. 2, 3 and 4)7. | Rates specified in section 393(2) (Table: Sl. Nos. 2, 3 and 4).
6. | Distributed income being interest referred to in section 393(2) (Table: Sl. No. 6)8. | Rate specified in section 393(2) (Table: Sl. No. 6).
7. | Income received in respect of units, purchased in foreign currency, of a Mutual Fund specified in Schedule VII (Table: Sl. No. 20 or 21) or of the Unit Trust of India. | 20%
8. | Total income as reduced by income referred to against serial numbers 1 to 7. | Rates in force.
(2) Where the total income of a non-resident (not being a company) or of a foreign company, includes any income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made with Government or an Indian concern after the 31st March, 1976, other than income referred to in section 59(1), and—
(a) the agreement is approved by the Central Government where such agreement is with an Indian concern; or
(b) where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, it is as per that policy, then, subject to the provisions of sub-section (3), the income-tax payable shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B of the Table below:—
TABLE
Sl. No. | Income | Rates of income-tax payable
A | B | C
1. | Royalty other than income referred to in section 59(1). | 20%
2. | Fees for technical services other than income referred to in section 59(1). | 20%
3. | Total income as reduced by income referred to against serial numbers 1 and 2. | Rates in force.
(3) Where the royalty referred to in sub-section (2) is in consideration for the transfer or grant of all or any rights (including the granting of a licence)—
(a) in respect of copyright in any book to an Indian concern; or
(b) in respect of any computer software to a person resident in India, then the provisions of sub-section (2) shall apply in relation to such royalty without application of provisions of clause (a) or (b) of that sub-section.
(4) For the purposes of this section,—
(a) “computer software” means any computer programme recorded on any disc, tape, perforated media or other information storage device; or any customised electronic data or any product or service of similar nature as may be notified by the Board, which is transmitted or exported from India to a place outside India by any means;
(b) “fees for technical services” shall have the meaning assigned to it in section 9;
(c) “royalty” shall have the meaning assigned to it in section 9.
(5) No deduction in respect of any expenditure or allowance shall be allowed under sections 28 to 58, 60 and 61 and section 93 for computing income referred to in sub-sections (1) and (2).
(6) Where the gross total income of an assessee—
(a) consists only of the income referred to in sub-section (1) (Table: SI. No. 1 to 7), no deduction shall be allowed under Chapter VIII and Schedule XV;
(b) includes any income referred to in sub-section (1) (Table: Sl. No. 1 to 7), the gross total income shall be reduced by such income and the deduction under Chapter VIII shall be allowed as if such reduced amount were the gross total income of the assessee.
(7) The provisions of sub-section (6) shall not apply to a deduction allowed to Unit of an International Financial Services Centre under section 147.
(8) It shall not be necessary for an assessee to furnish a return of income under section 263(1), if—
(a) the total income during the tax year consisted only of income referred to in sub-section (1) (Table: Sl. Nos. 1 to 7) and sub-section (2) (Table: Sl. Nos. 1 and 2); and
(b) the tax deductible at source under the provisions of Chapter XIX-B has been deducted from such income at a rate not less than the rate specified in sub-sections (1) and (2).
TABLE
Sl. No. | Income | Rate of Income-tax payable
A | B | C
1. | Dividend [other than dividends specified against serial number 2]. | 20%
2. | Dividend received from a unit in an International Financial Services Centre. | 10%
3. | Interest received from Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency not being interest referred to against serial numbers 4 and 5. | 20%
4. | Interest received from an infrastructure debt fund referred to in Schedule VII (Table: Sl. No. 46). | 5%
5. | Interest of the nature and extent referred to in section 393(2) (Table: Sl. Nos. 2, 3 and 4)7. | Rates specified in section 393(2) (Table: Sl. Nos. 2, 3 and 4).
6. | Distributed income being interest referred to in section 393(2) (Table: Sl. No. 6)8. | Rate specified in section 393(2) (Table: Sl. No. 6).
7. | Income received in respect of units, purchased in foreign currency, of a Mutual Fund specified in Schedule VII (Table: Sl. No. 20 or 21) or of the Unit Trust of India. | 20%
8. | Total income as reduced by income referred to against serial numbers 1 to 7. | Rates in force.
(2) Where the total income of a non-resident (not being a company) or of a foreign company, includes any income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made with Government or an Indian concern after the 31st March, 1976, other than income referred to in section 59(1), and—
(a) the agreement is approved by the Central Government where such agreement is with an Indian concern; or
(b) where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, it is as per that policy, then, subject to the provisions of sub-section (3), the income-tax payable shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B of the Table below:—
TABLE
Sl. No. | Income | Rates of income-tax payable
A | B | C
1. | Royalty other than income referred to in section 59(1). | 20%
2. | Fees for technical services other than income referred to in section 59(1). | 20%
3. | Total income as reduced by income referred to against serial numbers 1 and 2. | Rates in force.
(3) Where the royalty referred to in sub-section (2) is in consideration for the transfer or grant of all or any rights (including the granting of a licence)—
(a) in respect of copyright in any book to an Indian concern; or
(b) in respect of any computer software to a person resident in India, then the provisions of sub-section (2) shall apply in relation to such royalty without application of provisions of clause (a) or (b) of that sub-section.
(4) For the purposes of this section,—
(a) “computer software” means any computer programme recorded on any disc, tape, perforated media or other information storage device; or any customised electronic data or any product or service of similar nature as may be notified by the Board, which is transmitted or exported from India to a place outside India by any means;
(b) “fees for technical services” shall have the meaning assigned to it in section 9;
(c) “royalty” shall have the meaning assigned to it in section 9.
(5) No deduction in respect of any expenditure or allowance shall be allowed under sections 28 to 58, 60 and 61 and section 93 for computing income referred to in sub-sections (1) and (2).
(6) Where the gross total income of an assessee—
(a) consists only of the income referred to in sub-section (1) (Table: SI. No. 1 to 7), no deduction shall be allowed under Chapter VIII and Schedule XV;
(b) includes any income referred to in sub-section (1) (Table: Sl. No. 1 to 7), the gross total income shall be reduced by such income and the deduction under Chapter VIII shall be allowed as if such reduced amount were the gross total income of the assessee.
(7) The provisions of sub-section (6) shall not apply to a deduction allowed to Unit of an International Financial Services Centre under section 147.
(8) It shall not be necessary for an assessee to furnish a return of income under section 263(1), if—
(a) the total income during the tax year consisted only of income referred to in sub-section (1) (Table: Sl. Nos. 1 to 7) and sub-section (2) (Table: Sl. Nos. 1 and 2); and
(b) the tax deductible at source under the provisions of Chapter XIX-B has been deducted from such income at a rate not less than the rate specified in sub-sections (1) and (2).
Notes
5. Word “and” omitted by the Finance Act, 2026, w.e.f. 1-4-2026.
7. Inserted, ibid.
8. Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to their substitution, sub-sections (1), (2), (3) and (4) read as under : “(1) An assessee may make an application to the Assessing Officer for granting immunity from penalty under section 439 and initiation of proceedings under section 478 or section 479, if–– (a) the tax and interest payable as per the order of assessment or reassessment under section 270(10) or section 279, has been paid within the period specified in the notice of demand; and (b) no appeal against the order referred to in clause (a) has been filed. (2) An application referred to in sub-section (1) shall be made within one month from the end of the month in which the order referred to in clause (a) of the said sub-section has been received, in such form and manner as may be prescribed. (3) The Assessing Officer, on fulfilment of the conditions as specified in sub-section (1), and after the expiry of the period of filing appeal as specified in section 358(3)(a), shall grant immunity from penalty under section 439 and initiation of proceedings under section 478 or 479. (4) No immunity under sub-section (3) shall be granted if penalty under section 439 has been initiated under circumstances referred to in section 439(11).”
7. Inserted, ibid.
8. Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to their substitution, sub-sections (1), (2), (3) and (4) read as under : “(1) An assessee may make an application to the Assessing Officer for granting immunity from penalty under section 439 and initiation of proceedings under section 478 or section 479, if–– (a) the tax and interest payable as per the order of assessment or reassessment under section 270(10) or section 279, has been paid within the period specified in the notice of demand; and (b) no appeal against the order referred to in clause (a) has been filed. (2) An application referred to in sub-section (1) shall be made within one month from the end of the month in which the order referred to in clause (a) of the said sub-section has been received, in such form and manner as may be prescribed. (3) The Assessing Officer, on fulfilment of the conditions as specified in sub-section (1), and after the expiry of the period of filing appeal as specified in section 358(3)(a), shall grant immunity from penalty under section 439 and initiation of proceedings under section 478 or 479. (4) No immunity under sub-section (3) shall be granted if penalty under section 439 has been initiated under circumstances referred to in section 439(11).”