# Interest, Royalty & Fees for Technical Services – Sections 9(1)(v), (vi), (vii)
These three clauses share a common logic based on who pays and where the money/right is used.
## The common framework
Income is deemed to accrue in India if payable by:
1. The Government → always taxable.
2. A Resident → generally taxable, except where used for:
- a business/profession carried on outside India, or
- earning any income from a source outside India.
3. A Non-resident → generally not taxable, except where used for a business/profession or source of income in India.
## Master summary table
| Amount paid by | Interest | Royalty | FTS |
|---|---|---|---|
| Government | T | T | T |
| Resident (general) | T | T | T |
| → used for B/P outside India | NT | NT | NT |
| → used for other source outside India | NT | NT | NT |
| Non-resident (general) | NT | NT | NT |
| → used for B/P in India | T | T | T |
| → used for other source in India | NT | T | T |
T = Taxable (deemed to accrue); NT = Not taxable.
> ⚠️ Note the asymmetry in the last row: for a non-resident payer, where the money/right is used for a source (not B/P) in India, Interest is NT but Royalty and FTS are T.
## Special interest exception (Sec 9(1)(v))
Where a resident borrows but uses the funds for a business/profession outside India or to earn income from a source outside India, the interest is not taxable in India.
## Meaning of Royalty [Sec 9(1)(vi)]
Consideration for:
- Transfer of rights in / use of patents, inventions, models, designs, secret formula, process, trademark, or similar property.
- Imparting information on use/working of patents, inventions, etc.
- Imparting technical, industrial, commercial or scientific knowledge, experience or skill.
- Use or right to use industrial/commercial/scientific equipment.
- Transfer of rights in copyrights, literary/artistic/scientific work, films/tapes for TV or radio.
- Rendering services connected with the above.
Key clarifications:
- Computer software: Consideration for the use/right to use computer software (including licences, any medium) is royalty.
- Royalty includes consideration for a right/property/information even if the payer has no possession/control, does not directly use it, or it is not located in India.
- 'Process' includes transmission by satellite, cable, optic fibre or similar technology — whether or not the process is secret.
- Royalty covers both industrial and copyright royalties but excludes income taxable as capital gains.
- Exception: Lumpsum royalty paid by a resident to a non-resident for transfer of rights in computer software supplied along with computer hardware under the approved Policy on Computer Software Export, 1986 is NOT deemed to accrue in India.
## Clarification for clauses (v), (vi), (vii)
Interest, royalty or FTS is included in the non-resident's total income whether or not:
- the non-resident has a residence, place of business or business connection in India, AND
- the non-resident has rendered services in India.
In short — the income is deemed to accrue in India even if services are rendered entirely outside India.