India Tax Guide

India Currency: Indian Rupee

Foreign Exchange Control: A simplified regulatory regime is present concerning foreign exchange and capital account transactions.

Accounting Principles: Accounting standards are largely based on IAS. Financial statements prepared annually.

Business Entities: Principally, public and private limited liability companies, partnerships, limited liability partnerships, representative office and branch of a foreign corporation.

Corporate Taxation Residence: If the business is registered in India or management and control is centered in the country.

Basis: Residents are taxed on worldwide income. Non-residents are taxed only on Indian-source income. A branch of a foreign corporation is taxed as a foreign corporation.

Rate: 30% domestic, 40% for foreign companies.

Foreign Tax: Foreign tax may be credited against Indian tax on the same profits limited to the amount of Indian tax payable.

Other: Deductions for R&D, the purchase of new plant and machinery, agriculture projects etc.

Tax Year: Fiscal year operates from 1st April to 31st March.

Personal Taxation Residence: Residents are subject to tax from worldwide income; non-residents generally only on Indian-source income (resident if > 182 days in the country or > 60 days if the have spent > 365 days in India in the proceeding four years)

Rate:  250,000 to 500,000 = 10%
500,000 to 1,000,000 = 220%
More than 1,000,000 = 30%
15% on income above INR 10m.

Capital gains: Tax depends on whether gains are long or short term

Other: Stamp duty varies on a state by state basis. Real property tax varies on a state by state basis. 1% Net worth tax applies to aggregate value exceeding INR 3 million on non-productive assets.

Social security: employee and employer 12% each

VAT: General rate of 4% to 5%

Member Firm: Kohli & Chitkara & Company

Email: Shirad Kohli: skohli@kcccas.com