Overview

• The advisory proposal lets foreign companies opt to be taxed on a preset, industry-specific share of India-sourced gross revenue instead of case-by-case profit attribution.
• Opting in would trigger a safe harbour under which tax officials would not separately litigate the existence of a permanent establishment for the covered activity.
• Companies could opt out and file regular returns if actual profits are lower, with reduced compliance burdens such as no detailed local books for opted-in activities.
• Media and tax advisers cited illustrative benchmarks across sectors, including ranges around 5–30% of India-sourced revenue, with examples like 5% for offshore supply and 20% for onshore services.
• The paper also calls for codifying PE and attribution rules aligned with OECD/UN norms, avoiding retrospective changes, expanding APA/MAP capacity, training officers, and forming a working group before any Finance Bill drafting.