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India Tax Deductions

All forms of relief relate to the income of an individual who is an Indian resident.
The following amounts are subject to the definition and ceilings in Indian law:

Personal Relief
  • A credit for donations given by an individual up to a limit
  • A credit for a taxpayer who is disabled or for a disabled member of the family up to INR 50,000 or INR 75,000 in the case of a severely disabled person.
  • 20% of the investment in government bonds and investment plans as defined in law.
  • Payments for medical insurance as well as medical expenses up to INR 50,000 of the taxpayer or his dependant relatives.
  • Interest on mortgage for residence, up to INR 150,000 per year.
  • Royalties received by artists/authors, up to a limit.

India Business Deductions

Some of the following business expenses are allowable for tax purposes in India, subject to certain conditions:
  • Offset of losses - a loss may be offset in India over 8 years. There is no retrospective offset of losses.
  • Consolidated expenses - there are no consolidated statements for tax purposes in India.
  • Financing expenses -as a general rule, financing expenses that are for the creation of income are generally allowable as an expense.
    Nevertheless, interest expenses for tax exempt income is not an allowable expense.
  • Transactions between associated parties - the Indian income tax authorities investigate transactions between associated parties that are not conducted according to the accepted market conditions for transactions with companies that are not associated.

  • India Depreciation

    Fixed assets are depreciated, in most cases, according to the declining balance method

    The rates of depreciation in India are as follows:

    Class of Asset Annual Depreciation (%)
    Buildings 5 - 10%
    Furniture and equipment 10 - 15%
    Intangible assets (goodwill, etc.) 25%
    Machinery and equipment 25%
    Vehicles 20%
    Aircraft and trucks 40%

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