DOING BUSINESS IN INDIA

Posted By Romain Ponsot on Oct 6, 1907 in Doing Business


Date de publication : 06-10-1907

modèle générique Placeholder
modèle générique

Complete list of the other countries…

 

 

The following information are for the sole purpose  of providing a general overview of  the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.

 

Yes we tax in India

 

Flash News

New tax reform: Pan Number is not anymore compulsory for intra-group distribution of dividends free of tax.

News in French language in this article (http://www.lexplicite.fr/relations-franco-indiennes-evolutions-recentes-fiscalite/).

New tax treaties:

  • Protocol to tax treaty between India and Portugal is signed.
  • Protocol to tax treaty between India and Vietnam enters into force.

Local tax advisors

No specific information on the local tax advisors.

Local tax administration

Website Income tax department: Click here

Permanent Establishment

Resident companies are taxed on their worldwide income. However, non-resident companies are only taxed on their revenues derived from India sources.

The definition of resident company for tax purposes, corresponds to the definition of the OECD Model Convention. As per article 4 of the OECD Model Tax Convention, a person is treated as resident of a contracting state if he is liable to tax in such a country by virtue of his domicile, residence or place of management or any other similar criterion.

Entities are considered to be resident for tax purposes in India if their place of management & control is in India.

However, the place of residence is subject to the relevant provisions of any applicable double tax treaty, if any.

Corporate Income Tax

The general CIT tax rate is 30%.

In addition there is a surcharge and an education cess; As a consequence the effective CIT tax rate up to 34.608%.

Note: There is a minimum tax up to 20.38% on book profits (effective tax rate including surcharge and eduction cess).

Non-taxable income includes the following:

  • Dividends (participation exemption).
  • Capital gains under certain condition.

Non-deductible expenses includes the following:

  • Dividends benefiting from the participation exemption

Carry forward : Yes 8 years, but some restrictions may apply

Carry back: No

Annual tax returns are established by the company on a self-assessment system.

Companies shall pay 4 advance payments on 15 June, 15 September, 15 December of the current taxable year and 15 March of the following year.

Whithholding Taxes (payment to foreign companies)

The local tax rates in India are the following, subject to the provisions of an applicable double tax treaty, if any.

There is no WHT on the profits paid from a branch to its foreign head office .

Note: Indian branches of non-resident companies are subject to a 40% CIT tax rate on their Indian-source incomes.

There is no WHT on dividends.

Note: there is a 20,358% dividend distribution tax (not in the scope of the article « dividends » of the double tax treaties).

The effective tax rate of WHT on interest is 21.63%%.

The effective tax rate of WHT on Royalties is 10.5% (including surcharge and education cess).

The effective tax rate of WHT on management fees is 10.5% (including surcharge and education cess).

The effective tax rate of WHT on technical services is 10.5% (including surcharge and education cess).

Capital gains

There is a specific regime for the capital gains.

Sales tax

Central tax rate is between 2% and 10% depending of the goods.

No other specific information of VAT in India.

Miscellaneous

No information on the statute of limitation in India.

There is a foreign exchange control in India.

There are no thin capitalization rules in India.

 

 

 

Do not hesitate to share your experience in India with us in the comments below. Any comments are welcome !

 

Romain Ponsot

Romain est conseiller en fiscalité au sein d’un leader mondial du shipping. Grâce à son expertise tant en matière de TVA, fiscalité internationale, problématiques intragroupe qu’en matière de fiscalité des particuliers, Romain vous guidera au travers d’articles professionnels et humoristiques. 

Romain, poète dans l’âme, aime particulièrement le couscous et passe beaucoup de temps à glacer ses souliers. Profil LinkedIn
Romain Ponsot

Les derniers articles par Romain Ponsot (tout voir)

Submit a Comment

Votre adresse de messagerie ne sera pas publiée. Les champs obligatoires sont indiqués avec *

Ce site utilise Akismet pour réduire les indésirables. En savoir plus sur comment les données de vos commentaires sont utilisées.