Rule 13 — Threshold for purposes of significant economic presence. Made under s.9 of the Income-tax Act, 2025.
Rule 13 gives effect to Section 9 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
The rule fixes the two thresholds that turn a non-resident's Indian activity into a significant economic presence. Sub-rule (1) sets the threshold for section 9(9)(d)(i): the aggregate amount of payments from transactions carried out by a non-resident with any person in India, in respect of any goods, service or property including provision for download of data or software in India during the tax year, is two crore rupees. Sub-rule (2) sets the threshold for section 9(9)(d)(ii): the number of users with whom systematic and continuous business activities are solicited, or who are engaged in interaction, is three lakh — the text writes the figure as "Rs. 300000", but it is a count of users, not an amount of money.
The rule does nothing else. It does not say what a significant economic presence is, what income is attributable to it, or how that income is computed; those come from section 9(9). The rule supplies only the two numbers the section leaves blank.
Section 9(9)(d) makes a significant economic presence a business connection, but its two limbs are stated in terms of a prescribed amount of payments and a prescribed number of users. Without figures the limbs cannot bite at all. The rule supplies both, and by doing so decides which non-residents with no physical presence in India are drawn into the deeming provision.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Aggregate amount of payments from transactions with any person in India | Two crore rupees | Transactions carried out by a non-resident in respect of any goods, service or property, including provision for download of data or software in India, during the tax year | Sub-rule (1), for section 9(9)(d)(i) |
| Number of users | 3,00,000 users (the text writes it as "Rs. 300000") | Users with whom systematic and continuous business activities are solicited or who are engaged in interaction | Sub-rule (2), for section 9(9)(d)(ii) |
The two limbs are separate tests with separate numbers, and each answers a different question in section 9(9)(d) — the payments limb is measured over the tax year, while sub-rule (2) fixes a number of users without a stated period of its own. The payments figure is an aggregate, not a per-transaction figure, so a stream of small dealings with persons in India adds up towards the two crore rupees. Payments in respect of provision for download of data or software in India are expressly inside the aggregate, which is what brings a purely digital supplier within reach. The users figure counts users with whom activities are solicited as well as users engaged in interaction, so an audience that is being solicited counts even where nothing has yet been sold to it. Crossing a threshold establishes the connecting factor the section needs; what is then taxable is a question for section 9(9), not for this rule.
A non-resident software supplier with no office in India sells downloads to customers in India for Rs 1.4 crore during the tax year and separately supplies services to Indian businesses for Rs 70 lakh in the same year. The aggregate is Rs 2.1 crore, above the two crore rupees in sub-rule (1), and the section 9(9)(d)(i) limb is crossed even though no single contract came near the figure. Had the aggregate been Rs 1.9 crore, the supplier would still have to test the user limb in sub-rule (2) separately against the three lakh figure.
A non-resident meets it when working out whether it has a business connection in India and therefore a return and withholding exposure; an Indian payer meets it indirectly, in the questions asked about the payee's Indian footprint before a payment goes out gross.
the aggregate amount of payments from transactions carried out by a non-resident with any person in India, in respect of any goods, service or property including provision for download of data or software in India during the tax 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 Rs. 300000