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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year begins on 1st of April and ends on the 31st of March of the next year.
Accounting Standards
Indian Accounting Standards (IAS) are based on the statements issued by the Institute Of Chartered Accountants of India (ICAI).
Accounting Regulation Bodies
Institute of Chartered Accounts of India
Accounting Reports
'Balance Sheet' and 'Profit & Loss' report.
Publication Requirements
The "balance sheet" and ‘profit and loss account' need to be published every fiscal year.
Professional Accountancy Bodies
ICAI , Institute of Chartered Accounts of India
Certification and Auditing
Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. For more information, consult the Auditor Association and The Institute of Cost and Works Accountants of India (ICWAI)
Accounting News
Accounting news in India
India accounting news

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) and Sale taxes, depending on the State. For more details, consult the business portal of India. A nationwide Goods and Services Tax (GST) whose rate will be around 14-16% is expected to be launched in 2013.
Tax Rate
12.5%
Reduced Tax Rate
The lower rates are 4% (agriculture and industrial inputs) and 1% (gold and silver ornaments).
Other Consumption Taxes

Service Tax: 12%, the effective rate of service tax is 12.36% (including  the education cess at the rate of 3%). It applies to more than 100 services. For details visit the web site: Service Tax.
Excise Duty: 8% (on drugs, pharmaceuticals, cans, paper, Water filtration and purification devices, etc), 12% (small cars, packaged software), 14% (cement) and 24%.
For further information consult the Central Board of excise and Customs.

Learn more about Service Providers in India on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
30% for domestic companies and 40% for foreign companies and branches of foreign companies.
Tax Rate For Foreign Companies
Resident companies are subject to tax on gross worldwide income while non-resident companies are taxed only on Indian-source income.
Capital Gains Taxation
Long-term capital gains: 20% flat with indexation or 10% flat without indexation.
Short-term capital gains: 15%.
Gains from the sale of long-term capital assets are exempt from capital gains tax if they are reinvested in certain securities within six months and locked in for three years.
Main Allowable Deductions and Tax Credits
Specific deductions are allowed:

- A 100% deduction for interest payments on borrowed capital,
- Capital expenditure on research conducted in-house and for payments made for scientific research to specified organizations,
- Interest, royalties and fees paid outside of India to overseas affiliates or in India to a non-resident provided tax as required is withheld,
- Payments to employees under voluntary retirement schemes may be deducted over five years,
- Business losses (conditions apply).

Indian tax law does not permit companies to take a deduction for a general bad-debt reserve, although specific bad debts may be deducted when written off. For additional information, consult India Tax Deduction on mapsofindia.com.

Other Corporate Taxes

A Minimum Alternate Tax (MAT) is imposed at 18.5% or 19.467% (with surcharge, basic rate of 18% plus the surcharge of 5% and the cess of 3%) of adjusted book profit. The surcharge applies only if the book profit exceeds INR 10 million.

A ‘fringe benefits tax' of 30% is imposed on the value of fringe benefits that companies provide or are deemed to provide to their employees.

Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  India South Asia United States Germany
Number of Payments of Taxes per Year 33.0 30.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 243.0 311.0 175.0 207.0
Total Share of Taxes (% of Profit) 61.8 40.2 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Taxation Income (INR) Progressive Tax Rate up to 30%
Less than 200,000 0%
200,001 – 500,000 10%
500,001 – 1,000,000 20%
1,000,001 and above 30%
Above 10,000,000 One-time surcharge of 10%
An education cess of 3% is levied on the tax payable. The maximum marginal tax rate on annual income is effectively 30.9% (30% + 3% education cess).
Allowable Deductions and Tax Credits
Deductions are allowed for contributions to life insurance, recognized provident funds, national savings certificates, the national savings scheme, income from certain mutual funds and dividends, and some educational expenses up to an overall ceiling of INR 100,000.
Special Expatriate Tax Regime
There are no special exemptions or deductions available to foreign nationals working in India, except for local living allowances, which are exempt to the extent expense is actually incurred.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Treaties signed with countries for avoidance of double taxation.
Withholding Taxes
Dividends: 0%, Interest: 20%, Royalties:10%

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Sources of Fiscal Information

Tax Authorities
Income Tax Department
Other Domestic Resources
Central Board of Excise and Customs
Income Tax Act 1961
Department of Commerce
Service Tax
National Website of Income Tax Department of India

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Learn more about Taxes and Accounting in India on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
Controller-General of Patents, Designs and Trademarks
Copyright Office
Protection of Plant Varieties and Farmers' Rights Authority
Department of Information Technology
National Intellectual Property Organization (NIPO)
Regional Organizations
None
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 

 

Patents Act, 1970


20 years
Patent Cooperation Treaty (PCT)
Trademark
 
Trade Marks Act, 1999
10 years, renewable every 10 years with a grace period of 6 months for renewal. Trademark Law Treaty
Design
 
Designs Act, 2000

10 years, renewable for another 5 years.  
Copyright
 

Copyright Act, 1957

60 years, varies for different works.

Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Semi-Conductor Integrated Circuits Layout-Design Act,2000
10 years, non-renewable.  

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Legal Framework

Independence of Justice
Judiciary is largely independent in India. But, the courts are severely backlogged and understaffed which results in the detention of a large number of persons who are awaiting trial. India accepts compulsory ICJ jurisdiction, with reservations.
Equal Treatment of Nationals and Foreigners
Though India is ruled by law and in the texts justice ensures non-discriminatory treatment of all cases. However in practice, fair trial to foreign nationals from the country's judicial system cannot be always guaranteed.
The Language of Justice
Hindi.
Recourse to an Interpreter
Interpreters in other foreign languages are easily available.
Sources of the Law and Legal Similarities
The Constitution of India – 1950

 

The country also has separate personal law codes for Muslims, Christians, and Hindus.

Checking National Laws Online
Legislation India
Laws for India
India Laws

Learn more about Lawyers and Legal in India on Globaltrade.net, the Directory for International Trade Service Providers.

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Standards

National Standards Organizations
Bureau of Indian Standards(BIS) - Earlier called as Indian Standards Institute (ISI)
Integration in the International Standards Network
The BIS is a founder member of the International Standard organization (ISO) and of the International Electrotechnical Commission (IEC)

For more details consult www.bis.org.in.

Classification of Standards
The symbol of the standard is ISI. Every ISI mark has a fixed format that carries the Indian Standard number on top of the mark based on the type of product.
Online Consultation of Standards
Bureau of Indian Standards (BIS)
Certification Organizations
Quality Council of India

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Business Practices

General Information
Official web site of India
BuyUSA Information Guide
The Executive Planet
Doing Business
Opening Hours and Days
Shops are closed on Sunday. Government offices are closed on Saturday and Sunday. Banks close in the afternoon (from 14 in the week, from 12 on Saturday).
 

Public Holidays

New Year's Day 1st January
Idu'z Zuha / Bakrid (Muslim festival) Dec/Jan, changes according to the year.
Republic Day 26th January
Mahashivratri (Hindu festival) Feb/March, changes according to the year.
Mahavir Jayanthi (Hindu festival) Feb/March, changes according to the year.
Holi (Festival of Colors) and Phagwah – Hindu Festival March, changes according to the year.
Milad-Un-Nabi (Birth of the Prophet Mohammed) April/May, changes according to the year.
Good Friday April, changes according to the year.
Buddha Purnima (Hindu festival) May, changes according to the year.
Independence Day 15th August
Janmashtami (Birthday of Lord Krishna of Hindus) Sep, changes according to the year.
Mahatma Gandhi's Birthday 2nd October
Id ul Fitr (End of Ramadan) Oct, changes according to the year
Dussehra (Vijaya Dashami, a Hindu Festival) Oct, changes according to the year
Deepavali or Diwali (Festival of Lights, a Hindu Festival) Nov, changes according to the year
Guru Nanak's Birthday (A Sikh festival) Nov, changes according to the year
Christmas Day 25th Dec
Note: Only the secular holidays of Republic Day, Independence Day and Mahatma Gandhi's Birthday are universally observed. Other public holidays in India tend to be observed on a strictly regional basis.
 
 

Periods When Companies Usually Close

Deepavali 2-3 days, Deepavali generally falls in the month of November
New Year 1-2 days on 31st Dec and 1st Jan
 

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Last Updates: October 2014