India

Click on each topic for more information
:

TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

The effective rate applicable to residents companies is 33.66% (a basic rate of 30% with a 10% surcharge and 2% education cess).
Foreign companies are subjected to a 41.82% effective rate (a basic rate of 40% with a 2.5% surcharge and 2% education cess).

   
Tax rate on long-term capital gains Long-term capital gains are taxed at a basic rate of 20%. However, long-term capital gains from sale of equity shares or units of mutual funds are exempt from tax.
   
   
Tax rate on branches Branches are taxed in India at the rate of 41.82%.




Income tax

Fiscal year The fiscal year begins on April the 1st and ends on March the 31st of the next year.
   
Income tax rate The progressive rate of the income tax varies from 0% to 30%:
Taxable Income (INR) Tax rate
less than 100,000 0%
100,001 to 150,000 10% of the amount exceeding INR 100,000
150,001 to 250,000 INR 5,000 + 20% of the amount exceeding INR 150,000
250,001 and above INR 25,000 + 30% of the amount exceeding INR 250,00
Up to 135.000 INR and 185.000 INR respectively women and people who are more than 65 years old can be exempt from income taxes.
   
Tax deductions or other allowances Deductions are allowed for contributions to life insurance, recognised provident funds, national savings certificates, national savings schemes, income from certain mutual funds and dividends, and some educational expenses up to an overall ceiling of INR 100,000.



VAT rates

Standard rates 12.5%
Central sales tax (CST) continues to co-exist with the state VAT. The effective rate varies from 16 to 25%. There is also a service tax imposed on a wide range of services (insurance, air transport services, construction services, etc...) at a rate of 12% (12.24% including the education cess).
A three-tiered excise duty structure of 8%, 16% and 24% applies.
   
Reduced rates The lower rates are 4% and 1%. The 4% rate applies to agriculture and industrial inputs, capital goods and medicines. The 1% rate applies to gold and silver ornaments.



Other important taxes


Name of tax
Rate
Wealth tax  
1% from INR 1.5 million  
R&D cess  
5%  


 

Accounting

Introduction
Indian financial accounting aims at giving a sincere overview of the results of the company.


Obligations and publications
The balance sheet and the profit and loss account must be published every fiscal year.

Certification and auditing
Every fiscal year must be verified by an auditor who must be a member of "The Institute of Cost and Works Accountants of India".

Professionals and representative organizations
The main representative body is "The Institute of Chartered Accountants in India".



Useful links
- Income Tax India website
Indian Finance and Investment Guide

Last modified in January 2007
Export Entreprises©, All rights reserved