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CMA Final · Direct Tax Laws and International Taxation · Interest and Fees

Under the Income-tax Act, 2025, a foreign company has total income consisting only of royalty received from an Indian concern under an agreement that satisfies the conditions of section 207(2). Which statement about the filing of its return of income is correct?

A foreign company whose total income is only the specified royalty need not file a return if tax was deducted at source at not less than the rate specified in section 207. Being a foreign company does not by itself require filing.

  1. AIt need not file a return if tax has been deducted at source on that income at a rate not less than the rate specified in section 207Correct
  2. BIt must always file a return because it is a foreign company
  3. CIt need not file a return only if the royalty is below the basic exemption limit
  4. DIt need not file a return only if no tax has been deducted at source

Explanation

Section 207(8) excuses the return where the total income consists only of the specified income and tax deductible at source under Chapter XIX-B has been deducted at a rate not less than the rate specified in section 207. The status of the assessee as a foreign company does not by itself force filing, so the second option is wrong.

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