India: Domestic Corporate Taxation
Taxation of a Company Limited by Shares
Indian companies are taxed on the previous year's income. Thus, for resident companies, income in the 2012/2013 financial year is assessed to tax in the 2014/2014 year, at a rate of 30% plus surcharge (5%) and education 'cess', for a total of 32.445%.
Companies with taxable income below INR10m are exempt from the surcharge.
Non-resident companies are taxed at 40% plus surcharge and 'cess' giving a total of 42.02%.
The Direct Taxes Code, which was set to come into force in April 2012, would put in place a flat 30% rate of corporate income tax for both resident and non-resident companies; but foreign-owned companies would pay a 15% 'branch profits tax'.The introduction of the Direct Taxes Code was put off yet again in early 2013, and the situation remains highly uncertain.
There is a Minimum Alternative Tax which bears on companies declaring taxable profit of less than 18.5% of accounting profit, at an effective rate including surcharges of approximately 20% (2012/13).
Dividend distributions to shareholders are subject to a 15% final withholding tax (plus surcharges).