Corporate Tax in India
Updated on Friday 15th December 2017
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One of the main requirements when starting a company in India is to register for corporate taxation. Under the Indian Companies Act, corporate tax is defined as the tax imposed on net income of a legal entity operating in this country. The taxation of companies in India is performed depending on the residency of the respective business. At the same time, it is necessary to know that the rates of corporate taxation differ on the residency of the company, as well as on the net income of the company on a financial year. Our team of specialists in company formation in India can advise on the levels of corporate taxation imposed in this jurisdiction.
Regulations for corporate taxation in India
A company that is a tax resident in India is liable for corporate taxation on its worldwide income. Foreign businessmen who want to register a company in India as a foreign company will be taxed only for the income deriving from business activities carried out on the Indian territory.
As a newly formed company, it is necessary to register for tax purposes in this country and in this sense, it is compulsory to apply for a Permanent Account Number.
Corporate tax rates in India
The rates of corporate tax in India range from 25% to 40%, depending on the residency of the company and its turnover obtained in a financial year.
In the case of a domestic company, the corporate tax is imposed at the rate of 25%, for a turnover below INR 500 million. However, the effective corporate tax that has to be paid is imposed at a progressive rate, when including other associated taxes (surcharge, education cess), which are imposed depending on the annual turnover. Our team of agents in company registration in India can provide more details on this matter.
Local companies with a turnover above INR 500 million are required to pay a corporate tax of 30%, while in the case of the investors who want to open a company in India as a foreign entity (including for branches of foreign companies), the corporate tax is applicable at the rate of 40%.
Our specialists can offer tax consultancy on the taxation of corporate entities operating here and investors are invited to contact our consultants in company formation in India for more details on the above mentioned aspects.