Transfer Pricing |
Double Tax Treaties
India Tax Rates
The corporate tax rate for domestic companies is 30%, along with a surcharge of 10%, where the total income exceeds INR 10 million. In addition, a 3% education cess, including indirect and service taxes, is levied. The 3% cess applies to the aggregate amount of income tax, plus the surcharge. Nonresident companies and branches of foreign companies are taxed at a rate of 40%, plus a 2.5% surcharge where the total income exceeds INR 10 million, and the 3% cess, bringing the effective tax rate to 41.2% (where income is less than or equal to INR 10 million), and 42.23% (where income exceeds INR 10 million).
A 10% surcharge (2.5% for nonresident companies) is imposed on domestic companies.
The effective tax rate for domestic companies is 30.9% (where income is less than or equal to INR 10 million) and 33.99% (where income exceeds INR 10 million). The effective rate for nonresident companies is 41.2% (where income is less than or equal to INR 10 million), and 42.23% (where income exceeds INR 10 million).
The rate for nonresident companies and branches of foreign companies is 40%. Nonresidents and branches are also subject to the 3% cess, plus a 2.5% surcharge.
Dividends are not subject to withholding tax. However, the company paying the dividends is subject to a dividend distribution tax of 15%, plus a surcharge of 10% and a cess of 3% on any amounts declared, distributed or paid as dividends. After adding the 3% cess, the effective rate of the dividend distribution tax is 16.995%.
Interest on loans paid to nonresidents companies on funds borrowed in foreign currency is subject to a 20% withholding tax, unless the rate is reduced under an applicable tax treaty. In addition, a surcharge of 10% (2.5% in the case of foreign corporations) and a 3% cess are imposed.
Under Indian domestic law, the withholding tax rate for royalties paid outside of India is 10%, plus a 2.5% surcharge (if payment exceeds INR 10 million) and a 3% cess, provided certain conditions are satisfied. The withholding tax is, therefore, 10.3%/10.5575%.