India: Domestic Corporate Taxation
Taxation of a Company Limited by Shares
This page was last updated on 13 Dec 2018.
Indian companies are taxed on the previous year's income. Thus, for resident companies, income in the 2016-2017 financial year is assessed to tax in 2017-2018. The rate is 30%, plus a surcharge (5% of the 30%) 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 has been was put several times, and as of December 2018 has still not been introduced. The situation therefore remains highly uncertain.
There is a minimum alternative tax which is levied on companies declaring taxable profit of less than 18.5% of accounting profit, at an effective rate including surcharges of approximately 20%. Dividend distributions to shareholders are subject to a 15% final withholding tax (plus surcharges).