Taxation
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Taxation of Business
India has a
well developed tax structure The main taxes/duties
that the Union Government is empowered to levy are
Income Tax (except tax on agricultural income, which
the State Governments can levy), Customs duties,
Central Excise and Sales Tax and Service Tax.
The principal
taxes levied by the State Governments are Sales Tax,
Stamp Duty, State Excise,Land Revenue, Tax on
Professions and like. The Local Bodies are empowered
to levy tax on properties, Octroi and for utilities
like water supply, drainage, etc.
Indian is a business friendly country yet to comply with local Tax Laws you need assistance of local consultants . We streamline can do that for you . We have experts to handle both Direct and Indirect Tax matters , Transfer Pricing Issues and all related matters. Tax laws distinguish between domestic and foreign companies in administering tax rates .
Indian Companies are taxed on their worldwide income .Foreign companies are taxed only on the income that arises from Indian operations ,on royalties and fees for technical services, interest on foreign currency loans, dividend and income from specified on mutual funds.
Corporate Tax Rates or changes thereon are declared on yearly basis through the budget of the Indian Government. For comprehensive details please refer to Income Tax Act 1961 and Income Tax Rules thereon.
Indian taxes can be grouped in two categories:
Direct taxes: Comprising of Income tax, Wealth tax and Gift tax.
Indirect taxes: Comprising of Customs duties, Excise duty, Sales tax, Service tax, Octroi/entry tax.
Indian Tax Year : April 1st to March 31st
Due Date for Filing Tax Returns : October 31st
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Corporate Tax Rates |
Domestic
Companies
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(a)
Corporate Tax |
30 |
| (b) Surcharge On Corporate Tax
@10% |
3 |
| (c) Education Cess on Corporate
Tax & Surcharge @2% |
0 .66 |
| Total effective Tax (a+b+c) |
33.66 |
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| Minimum Alternate Tax (If applicable) |
8.41 |
| Dividend Distribution Tax (applicable on Dividend
Distributed) |
14.03 |
Foreign
Companies
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(a)
Corporate Tax |
40 |
| (b) Surcharge On Corporate Tax
@2.5% |
1 |
| (c) Education Cess on Corporate
Tax & Surcharge @2% |
0 .82 |
| Total effective Tax (a+b+c) |
41.82 |
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| Minimum Alternate Tax (If applicable) |
7.84 |
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Personal Tax
Director
· Maximum Marginal Rate - 33.66% (30% + 10% surcharge +2% cess)
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FRINGE BENEFIT TAX (on all
employers) on deemed fringe benefits
RATE –
30% Plus 10% Surcharge plus 2% Education cess.
BANKING CASH TRANSACTION TAX
Tax @ 0.1 % on:
- Cash
withdrawal of
> Rs. 10000/- per day
- Bank
Draft purchased in cash > Rs. 10000/- Per day
- Term
Deposit Encashed > Rs. 10000/- Per day
SECURITIES TRANSACTIONS
TAX
The following changes in Tax
rules are proposed:
Transaction
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Delivery based |
0.075 |
0.10 |
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Non
Delivery Based |
0.015 |
0.020 |
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Derivatives |
0.01 |
.0133 |
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Sale of units of equity oriented
Mutual fund |
0.15 |
0.20 |
Withholding tax rates
for payment to non-residents are
determined by the Finance Act passed by the
parliament for each year. The current rates are:
(i)
Interest 20%
(ii) Dividends Dividends paid by
domestic companies : Nil
(iii)
Royalties 20%
(iv) Technical Services 20%
(v) Any Other
Services Individuals: 30% of the income Companies:
40% of the net income
The above
rates are general and in respect of countries with
which India does not have a Double Taxation
Avoidance Agreement (DTAA).
Repatriation of Earnings:
A foreign national may open bank accounts in India and receive funds from abroad. A foreign national is allowed to receive directly from the foreign company outside India, upto 75% of salary subject to prescribed conditions
Or
Receive entire salary in India and remit upto 100% of the net salary for maintenance of close relatives abroad, subject to prescribed conditions.
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