India Tax RatesLast partial update, July 2017
India Tax Rates
- The tax in India on an individual's income is progressive from 5% to 30% for 2017. An education tax (CESS) of 3% is imposed too. There is a 15% surtax for income exceeding INR 10 million.
- A limited company in India is liable for tax in 2017 at the rate of 30% for a local company and 40% for a foreign company with the addition of surcharge (for income above INR 10 millions, 7% for domestic companies, 2% for foreign companies) as well as an education tax (CESS) of 3%.
When income exceeds INR 100 million the surcharge is 12% for domestic companies and 5% for foreign companies.
The top effective tax rate in India is 34.608% for a local company and 43.26% for a foreign company.
- Companies in India whose tax liability is less than 18.5% of the "book profits" pay a 18.5% minimum alternative tax, MAT on the "book profits" with a surcharge and CESS, bringing the effective tax rate of 20.01% for domestic companies and 19.44% for foreign companies.
India Capital GainsCapital gains for companies and individuals in India are divided into 2 groups, long term capital gains and short term capital gain.
- Long term capital gains relate to the sale of an asset that has been held for 3 years or longer (on the sale of listed securities on the Indian Stock Exchange, shares that have been held for over a year, or for unlisted shares being held for more than two years).
When the asset has been held for a shorter period than that defined as long term, the capital gain is deemed to be a short term gain.
- The long term tax rate is 20% for assets, For purposes of calculation, the cost is adjusted to the increase in the Index and deducted from the proceeds.
- Capital gains from the sale of long term negotiable securities on the Indian Stock Exchange are tax exempt when the sale is subject to Securities Transaction Tax , otherwise they are taxed at 10%.
- A short term capital gain is added to regular income. At the same time a capital gain on the sale of negotiable securities on the Stock Exchange which is subject to Securities Transaction Tax is taxed at 15% for individuals and companies.
Table of Income Tax Rates in India for an Individual 2017.
|Tax %||Income (INR)|
|0%||1 – 250,000|
|30%||1,000,001 and above|
- There is an "Education tax" (CESS) of 3%.
- An additional 15% surtax on the tax payable is imposed on income exceeding INR 10 million.
India Overseas Income
- An individual and company who are Indian residents are also taxed on their income outside India and receive a credit for overseas taxes
- Qualification for residence for an individual:
Residence in India of at least 182 days in the tax year,
Or: Residence in India at least 60 days in the tax year and at least 365 days in the 4 previous years.
- An Indian resident is also taxed on his income overseas.
India Reporting Dates and Payment
- The tax year in India begins on April 1 and ends on March 31.
- An individual whose income is from a business must submit an annual return by October 31. There is a fine of 10% of the tax payable for each month's delay.
- An individual whose income is from a wage or whose income is subject to a deduction of tax at source, is exempt from submitting an annual return.
- An advance payment must be made on 3 dates - September 15, December 15 and March 15.
- There is an official body in India that deals with the subject of pre-ruling in connection with tax problems that are presented for discussion.
India Deduction of Tax at SourceTaxation of Employees
- An employer is obligated to deduct tax at source on a monthly basis from a salaried employee and to make additional contributions to a provident fund and insurance.
- The Indian employer's contribution to provident fund is 12% in general.
Employees pay to provident funds 12% of their salary.
India Other deductionsThe following payments to non-residents are subject, in India, to a deduction of tax at source (rates are before surcharge and cess):
- Dividend - 0%.
- Interest - 20%. (Before surcharge and cess).
- Royalties - 10% (Before surcharge and cess).
- Technical Fees - 10% (Before surcharge and cess).
Comments: The deduction at source for payments to foreign residents is subject to the Double Tax Prevention Treaty to which India is a signatory.
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
Please read our terms of service before entering this site.