Section 44C → Section 55
Deduction of head office expenditure in the case of non-residents
Quick Answer
Section 44C of the Income Tax Act, 1961 (Deduction of head office expenditure in the case of non-residents) corresponds to Section 55 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 44C
Under the Income Tax Act, 1961, Section 44C governs deduction of head office expenditure in the case of non-residents. Restricts the deduction of executive and general administration expenses incurred by the foreign head office allocable to its Indian branch (capped at 5% of adjusted total income).
Under the Income-tax Act, 2025 (effective 1st April 2026), Section 44C is retained and renumbered as Section 55 of the Income-tax Act, 2025. Retained verbatim. Prevents foreign companies from artificially eroding the Indian tax base by allocating excessive overheads to the Indian branch.
The transition impact on Section 44C is assessed as High. Crucial transfer pricing and international tax provision.
Sec 44C
Provision Summary
Restricts the deduction of executive and general administration expenses incurred by the foreign head office allocable to its Indian branch (capped at 5% of adjusted total income).
Sec 55
Provision Summary
Retained verbatim. Prevents foreign companies from artificially eroding the Indian tax base by allocating excessive overheads to the Indian branch.
Key Changes & Highlights
- None.
Related Sections
Frequently Asked Questions
Which subject does Section 44C of the 1961 Act cover?
Section 44C of the Income Tax Act, 1961 covers deduction of head office expenditure in the case of non-residents. Restricts the deduction of executive and general administration expenses incurred by the foreign head office allocable to its Indian branch (capped at 5% of adjusted total income).
What is the new section number for Section 44C under the Income-tax Act, 2025?
Section 44C of the Income Tax Act, 1961 maps to Section 55 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained verbatim. Prevents foreign companies from artificially eroding the Indian tax base by allocating excessive overheads to the Indian branch.
How does the Income-tax Act, 2025 affect Section 44C in practice?
The transition impact for Section 44C is rated High. Crucial transfer pricing and international tax provision.
What is new about Section 44C under the Income-tax Act, 2025?
None. These points are specific to Section 44C (Deduction of head office expenditure in the case of non-residents).
Disclaimer: This mapping of Section 44C (Deduction of head office expenditure in the case of non-residents) to Section 55 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 44C is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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