Section 44BBA of ITA, 1961 : Section 44Bba: Special Provision For Computing Profits And Gains Of The Business Of Operation Of Aircraft In The Case Of Non-Residents

Explanation using Example

Let's say there is a non-resident airline company, "FlyHigh Airlines," which operates flights to and from India. In the financial year, FlyHigh Airlines earns revenue from passengers and cargo that it transports from various cities in India to destinations abroad, and also from flights that come into India from international destinations.

According to Section 44BBA of the Income-tax Act, 1961, instead of calculating the actual profits from its operations, which would require accounting for all sorts of expenses and deductions under sections 28 to 43A, FlyHigh Airlines can opt for a presumptive taxation scheme.

Under this scheme, FlyHigh Airlines would be taxed on 5% of the aggregate amount it earns from:

• Carrying passengers and cargo from any place in India (regardless of where the payment was made), and
• Revenue deemed to be received in India for services provided outside India.

This simplifies the tax calculation for FlyHigh Airlines, as they would only need to declare 5% of their total receipts from these operations as their taxable income in India, without going through the detailed process of expense deductions.