This section addresses the treatment of royalty payments made by a company to associated entities resident in specified territories. Such payments, where not classified as excluded payments, are deemed as annual profits derived from property within the State, thereby attracting tax obligations under Schedule D.

Moreover, the section stipulates that certain provisions may not apply if the arrangements are primarily to circumvent this taxation framework. This creates a clear regulatory environment and highlights the importance of compliance in royalty payment structures to mitigate potential tax avoidance concerns.