Madaan & Co.
Attorneys at law & Advocates   lawfirm

TAX RATES IN INDIA

Tax Rates in India Corporate Taxes Individual Taxes
 Wealth Tax Gift Tax Tax laws
India USA Tax Treaty Applicable Rates, Tax Rates for USA Companies Doing Business in India, Withholding Taxes for Foreign Companies, Tax Rates for Foreign Companies Doing Business in India; Tax Rates for American Companies Doing Business in India; Tax Strategies for Foreign Companies Palnning to Do Business in India
 

Madaan & Co.
Attorneys at law
E-mail:  click here
Fax: (801) 606-7089

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The India Budget of 2009 - 2010 has introduced some changes in the tax rates in India. Click here for Recent Changes Proposed in the NEW BUDGET

Tax Rates in India

Withholding Taxes for Foreign Companies under the Tax Treaties | Entry Strategies in India for Foreign Investors | Previous Tax rates before 2008 Budget
 

Individual Income Tax Rates

Taxable Income
Tax Rate
Over
Not Over
0 Rs. 160,000 1 0       
Rs. 160,001 Rs. 300,000 10%   
Rs. 300,001 Rs. 500,000 20%  
Rs. 500,001 above 30%
1. Rs. 190,000 for women and Rs. 240,000 for seniors.    2. An  education cess of 3% is applicable.   3. (a) Tax exemption on interest in Non-Resident (external) Account and on interest payable by a scheduled bank to Non-Resident Indians (NRI's).  (b) Tax exemption on the interest payable by a scheduled bank to a non-resident or a person who is not ordinarily resident on deposits in foreign currency where the acceptance of such deposits by the bank is approved by the RBI. .

Domestic Corporate & LLP Income Taxes Rates

Tax Rate
Effective Tax Rate with surcharge & ed. cess
Domestic Corporations / Private Limited Companies 30% 33.99% 1
Domestic Corporations / Public Limited Companies 30% 33.99% 1
Limited Liability Partnership (LLP's)  30% 30.9% 2
1. A surcharge of 10% of the income tax is levied, if the taxable income exceeds Rs. 1 million. Educational cess is also added. 2. An Educational Cess is added to the basic tax rates. Surcharge is not applicable to LLP.  Unlike LLP's in the USA where they are pass-through entities for tax purposes, in case of LLP's in India, they are partially pass-through entities for tax paurposes. In India tax an LLP is required to pay income tax on 40% of its income; since an LLP is allowed to pay the balance of 60% as renumerations to it partners. Partners of an LLP are required to pay tax on the amount paid to them. Besides, LLP's are not required to pay dividend distribution tax or Minimum Alternate Tax (MAT).

3. All companies incorporated in India are deemed as domestic Indian companies for tax purposes, even if owned by foreign companies. Contact us for Incorporating in India

Foreign Corporate Income Tax Rates

Withholding Tax Rate for non-treaty foreign companies
Withholding Tax Rates for the USA Companies Doing Business in India under the India USA Tax Treaty
Dividends 20% 15% 1
Interest Income 20% 15% 2
Royalties 30% 20% 2
Technical Services 30% 20% 2
Other income 55% 55%  
1. Inter-corporate rates where there is minimum holding. There tax rates are applicable under the India USA Tax Treaty. For other countries the tax rates are different under the tax treaties between India and other countries, including Australia, Austria, Bangladesh, Belgium, Brazil, Belarus, Bulgaria, Canada, China, Cyprus, Czechoslovakia, Denmark, Finland, France, Germany, Greece, Hungary, Indonesia, Israel, Italy, Japan, Jordan, Kazakhstan, Kenya, Libya, Malta, Malaysia, Mauritius, Mongolia, Namibia, Nepal, Netherlands, New Zealand, Norway, Oman, Philippines, Poland , Qatar , Romania, Singapore, South Africa , South Korea , Spain , Sri Lanka , Sweden, Switzerland, Syria, Tanzania, Thailand, Trinidad & Tobago, Turkmenistan, Turkey , U.A.E. , U.A.R., U.K., U.S.A., Russian Federation, Uzbekistan, Vietnam and Zambia
2. 10% or 15% in some cases.
3. Withholding tax is charged on estimated income, as approved by the tax authorities.
4. There are other favorable tax rates under various tax treaties between India and other countries..

Wealth Tax

Net Taxable Wealth
Tax Rate
Over
Not Over
0 Rs.1,500,000 0
Rs.1,500,000 above 1%
Wealth tax is levied on non-productive assets whose value exceeds Rs.1.5 million. Productive assets like shares, debentures, bank deposits and investments in mutual funds are exempt from wealth tax. The non-productive assets include residential houses, jewelry, bullion, motor cars, aircraft, urban land, etc. Foreign nationals are exempt from wealth tax on non-Indian assets.  In arriving at the net taxable wealth, any debt incurred in acquiring specified assets is deductible.

Gift Tax

Net Taxable Gift
Tax Rate
Over
Not Over
0 Rs.30,000 0
Rs.30,000 above 30%
Gifts to dependent relatives at the time of marriage are exempt upto Rs.100,000.  Foreign nationals are exempt from gift tax on non-Indian assets.

Tax on cash withdrawal from banks


Withdrawn in the 2008 Budget.   [0.1% tax used to be levied on cash withdrawals of over Rs 25,000 from banks on a day. (Yes, this is true)]
US$1=Indian Rs. 4 app.
All rates as per on the date of update.
For Updated Tax Rates and International Tax Treaties Contact us
Please Read Disclaimer                               .365 .
 

Corporate Income Tax in India

For companies, income is taxed at a flat rate of 30% for Indian companies. Foreign companies pay 40%. An education cess of 3% (on the tax) are payable, yielding effective tax rates of 33.99% for domestic companies and 41.2% for foreign companies.

From the tax year 2005-06, electronic filing of company returns is mandatory.


Fringe Benefit Tax

Fringe Benefit Tax is a tax payable by companies against benefits that are seen by employees but cannot be attributed to them individually. This tax is paid as 33.99% of the benefit, which is only a percentage of the actual amount paid.

Some fringe benefits and their taxable rates are mentioned:

Fringe Benefit Taxable percentage Effective Tax Rate
Medical reimbursements 20% 6.8%
 
Telephone bills 20% 6.8%
 
Employee Stock Options (Difference between market value and purchase price on vesting date) 100% 33.99%

From April 1, 2007 , Employees Stock Option Plan (ESOP) or Sweat Equity has also been brought within ambit of fringe benefit tax. Section 115WB(1)(d) specifies that any ESOP will attract Fringe Benefit Tax, and the benefit is equal to the difference between the price paid and the fair market value of the share, as determined by the Board. Tax is levied on the date of vesting of such options. "Fair Market Value" is not yet defined by the Income Tax Department.
 

 

Services Offered by Us

Madaan & Co. has helped Companies from the USA, Europe, India and other foreign countries in their international tax planning and corporate structuring.  Click here to learn more about Our Services.

Our lawyers include those trained at premier law firms in the United States of America, Europe & India, who understand the multi-cultural aspects of international business and the multi-jurisdictional aspects of legal practice in this age of globalization.
Our professional team of attorneys-at-law include those educated at Harvard Law School, Harvard University in the USA.


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Contact Information:
Madaan & Co.
Attorneys at law
E-mail:  click here
Fax: +1 (801) 606-7089 (a US area code)
WWW.MADAAN.COM

Cultural Training Workshop for American & Canadian Executives Doing Business with India

Click here for details

 

Doing Business with India
National Conference in USA

Click here for date & location

  Legal Outsourcing
Legal Process Outsourcing
Legal Outsourcing
Paralegal Outsourcing