Presumptive Scheme for Airline Companies

Introduction

A non-resident engaged in business of operation of aircraft can be assessed on presumptive basis under Section 61(2) [Table S. No. 3]. In this scheme, the income is computed on presumptive basis at the rate of 5% of sum received by non-resident entity on account of carriage of passengers, livestock, mail or goods.

1. About the Scheme

1.1. What is presumptive taxation scheme under section 61(2) [Table S. No. 3]?

Income-tax Act allows non-resident person to calculate and pay tax on presumptive basis. This scheme has been introduced to reduce the burden of compliances on such entities. Thus, if an entity opts for presumptive tax scheme, it can pay tax on presumption basis without maintaining the books of accounts.

1.2. Who can opt for this scheme?

A non-resident person engaged in the business of operation of aircraft can opt for this scheme.

1.3. How much is presumptive income under the scheme?

The taxable income from the eligible business shall be 5% of the aggregate of the following amounts:

(a) Sum on account of carriage of passengers, livestock, mail or goods from any place in India. The amount may be paid in India or outside India. It may be paid directly to the assessee or to any other person on his behalf;

(b) Sum on account of the carriage of passengers, livestock, mail or goods from any place outside India, received or deemed to be received in India. The amount may be received by the assessee or by any other person on his behalf.

1.4. Provision overrides Sections 26 to 54

Section 61(2) [Table S. No. 3]  overrides the provisions of sections 26 to 54. Thus, income of a non-resident person, from business of operation of aircraft, shall be computed on presumptive basis and all other additions or deductions allowable under Section 26 to 54 shall be deemed to have been allowed.

1.5. Chapter VIII deductions

This section overrides the provisions contained in sections 26 to 54 only; the assessee opting for the presumptive taxation scheme under this section can claim a deduction under Chapter VIII.

This article is general information and not tax advice. Provisions change. Confirm your position with a qualified professional before acting.