Who may be regarded as agent
[Section-306 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 306(1) of Income Tax Act 2025
306(1) For the purposes of this Act, “agent”, in relation to a non-resident, includes––
- 306(1)(a) any person in India—
- (i) who is employed by or on behalf of the non-resident; or
- (ii) who has any business connection with the non-resident; or
- (iii) from or through whom the non-resident is in receipt of any income, whether directly or indirectly; or
- (iv) who is the trustee of the non-resident;
- 306(1)(b) any other person who, whether a resident or non-resident, has acquired by means of a transfer, a capital asset in India.
Section 306(2) of Income Tax Act 2025
306(2) A broker in India who, in respect of any transactions, does not deal directly with or on behalf of a non-resident principal, but deals with or through a non-resident broker shall not be deemed to be an agent under this section, in respect of such transactions, if the following conditions are fulfilled:—
- (a) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and
- (b) the non-resident broker is carrying on such transactions in the ordinary course of his business and not as a principal.
Section 306(3) of Income Tax Act 2025
306(3) A person shall not be treated as the agent of a non-resident unless he has had an opportunity of being heard by the Assessing Officer as to his liability to be treated as such.
Section 306(4) of Income Tax Act 2025
306(4) In this section, “business connection” shall have the meaning assigned to it in section 9(8)(b).
FAQs on Section 306 of Income Tax Act 2025
Who is considered an agent of a non-resident under Section 306(1)?
An agent includes any person in India who is employed by or on behalf of the non-resident, has any business connection with the non-resident, receives any income on behalf of the non-resident (directly or indirectly), or is the trustee of the non-resident. It also includes any other person, whether resident or non-resident, who has acquired a capital asset in India by means of a transfer.
Does acquiring a capital asset in India make someone an agent?
Yes, under Section 306(1)(b), any person who has acquired a capital asset in India by means of a transfer is regarded as an agent of the non-resident.
Is a broker in India always considered an agent of a non-resident?
No, a broker is not deemed to be an agent under Section 306(2) if they do not deal directly with or on behalf of the non-resident principal but operate through a non-resident broker, provided certain conditions are met.
What conditions must be met for a broker to not be considered an agent?
The transactions must be carried out in the ordinary course of business through the Indian broker, and the non-resident broker must also conduct such transactions in the ordinary course of his business and not as a principal.
Can someone be treated as an agent without being heard?
No, according to Section 306(3), a person shall not be treated as the agent of a non-resident unless they have had an opportunity of being heard by the Assessing Officer.
What is the meaning of “business connection” in this context?
As per Section 306(4), the term “business connection” shall have the meaning assigned to it in Section 9(8)(b) of the Income Tax Act, 2025.
Does the location of the agent (resident or non-resident) matter in all cases?
No, under Section 306(1)(b), even a non-resident can be considered an agent if they have acquired a capital asset in India through a transfer.
Is indirect income receipt by a person in India sufficient to regard them as an agent?
Yes, if a person in India receives any income, directly or indirectly, from or through the non-resident, they are deemed to be an agent under Section 306(1)(a)(iii).
Are trustees of non-residents always considered agents?
Yes, any person in India who is a trustee of a non-resident is considered an agent under Section 306(1)(a)(iv).
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