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Case law › Notifications › 2021 › Notification No. 41 /2021 [F. No. 370142/11/2018-TPL] / G. S. R. 314(E)
Notification 3 May 2021

Notification No. 41 /2021 [F. No. 370142/11/2018-TPL] / G. S. R. 314(E)

Ministry of Finance

What this is

Notification No. 41 /2021 [F. No. 370142/11/2018-TPL] / G. S. R. 314(E) was published on 3 May 2021. Its subject is Ministry of Finance.

This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.

What it does

The Central Board of Direct Taxes makes the Income-tax (13th Amendment) Rules, 2021 under clauses (a) and (b) of Explanation 2A to sub-section (1) of section 9 read with section 295 of the Income-tax Act, 1961, inserting new rule 11UD after rule 11UC of the Income-tax Rules, 1962. Rule 11UD fixes the two thresholds for significant economic presence. For clause (a) of that Explanation, the aggregate of payments arising from transactions in respect of any goods, services or property carried out by a non-resident with any person in India, including the provision of download of data or software in India, during the previous year is two crore rupees. For clause (b), the number of users with whom systematic and continuous business activities are solicited, or who are engaged in interaction, is three lakhs.

Who it reaches

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.
Under the 1961 ActNow
s.9s.9
s.295s.533

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it.

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 3rd May, 2021
INCOME-TAX
G. S. R. 314(E).— In exercise of the powers conferred by the clause (a) and clause (b) of Explanation 2A to sub-section (1) of section 9 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement. —(1) These rules may be called the Income-tax (13th Amendment) Rules, 2021.
(2) They shall come into force with effect from the 1st day of April, 2022.

2. In the Income-tax Rules, 1962, after rule 11UC, the following rule shall be inserted, namely:-
"11UD. Thresholds for the purposes of significant economic presence. — (1) For the purposes of clause (a) of Explanation 2A to clause (i) of sub-section (1) of section 9, the amount of aggregate of payments arising from transaction or transactions in respect of any goods, services or property carried out by a nonresident with any person in India, including provision of download of data or software in India during the previous year, shall be two crore rupees;
(2) For the purposes of clause (b) of Explanation 2A to clause (i) of sub-section (1) of section 9, the number of users with whom systematic and continuous business activities are solicited or who are engaged in interaction shall be three lakhs. ".

[Notification No. 41 /2021/ F. No. 370142/11/2018-TPL]
KAMLESH CHANDRA VARSHNEY, Jt. Secy.

Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969 (E), dated the 26th March, 1962 and last amended vide notification number G.S.R. 301(E), dated 30th April,2021.

Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.

What it changes

The rule numbers are the 1962 Rules’ own, as the notification names them. The right-hand column is the department’s own mapping into the Income-tax Rules, 2026, which renumbered nearly everything.
Rule of the 1962 RulesNow, in the 2026 Rules
Rule 11UDrule 12
Rule 11UCrule 11

From when

1 April 2022.

What to watch

Where you meet it

In deciding whether a non-resident has a business connection in India through significant economic presence, and in the withholding and return position that follows.

An example

Ours, not the Board’s: a worked case built from the rule the instrument sets, to show how it falls out.

A non-resident that has no office in India but receives payments from Indian customers for goods, services or property, including downloads of data or software, aggregating two crore rupees in a previous year meets the threshold under clause (a) of Explanation 2A. A non-resident whose Indian user base engaged in interaction or solicited for systematic and continuous business activity reaches three lakhs meets the threshold under clause (b) even if its receipts are below two crore rupees.

What it names

Rules it names. Rule 11UC of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

← Notification No. 43/2021 [F. No. 370133/17/2020-TPL] / S.O. 1732(E)  ·  Notification No. 40/2021 [F.No. 370142/8/2021-TPL] / G.S.R. 301(E) →

What a notification is. A notification is made under a power the Act itself gives, and within that power it is law — unlike a circular, which only binds the department. Its reach is the reach of the enabling provision and no wider, and the date it carries decides from when it works.

Source: the Income Tax Department’s own published text — its page for this instrument.