Budget 2025: Extension of presumptive tax regime to boost investment

The budget proposal to extend presumptive taxation regime for non-resident entities providing services in India's electronics manufacturing sector is expected to boost foreign investment and technology transfer, benefiting the local industry, said experts. A presumptive taxation regime is envisaged for non-residents who provide services to a resident company that is establishing or operating an electronics manufacturing facility to promote employment and investment.

"Extending the presumptive taxation scheme to certain non-residents is a strategic step to incentivise foreign participation in India's growing electronics manufacturing ecosystem. This will not only streamline tax administration but also provide clarity and certainty for global investors," finance minister Nirmala Sitharaman said in her budget speech. The move is part of the government's strategy to position the country as a global hub for electronics system design and manufacturing and will help the large Indian diaspora to participate in the electronics manufacturing growth story. The new regime, effective April 1, 2026, deems 25% of the total amount received by non-residents for services or technology as taxable profits, resulting in an effective tax rate of less than 10% on gross receipts.