India flag India: Entorn econòmic

Impostos a l'Índia

Tax Rates

Consumption Taxes

Nature of the Tax
Goods and Services Tax
Tax Rate
Goods and services can be subject to six different rates: 0.25% or 3% (diamonds and other precious stones, gold, silver), 5% (branded cereals, air transport of passengers in economy class, restaurants, construction services of residential apartment), 12% or 18% (electrical apparatus for radio and television broadcasting, accommodation in hotels where value of supply is greater than INR1,000 per unit per day, intellectual property rights, construction services other than residential apartments, banking services), and 28% (motor cars, air-conditioners, aerated drinks, access to race clubs and casinos).
Reduced Tax Rate
Examples of taxable supplies include:

  • 0.25% rate: rough precious and semi-precious stones
  • 3% rate: gold and silver
  • 5% rate: branded cereals; air transport of passengers in economy class; restaurants; construction services of residential apartment
  • 12% and 18% rates: electrical apparatus for radio and television broadcasting; accommodation in hotels where the value of the supply is greater than INR 1,000 per unit per day; intellectual property rights; construction services (other than residential apartments); banking services
  • 28% rate: motor cars; air-conditioners; aerated drinks; access to race clubs and casinos.

A GST compensation cess applies on some demerit and luxury items, including automobiles and tobacco products.

Other Consumption Taxes
The Goods and Services Tax (GST) system replaced the following indirect taxes: Excise duty, CVD/ADC, Service tax, VAT/CST, Entertainment tax, Luxury tax, Lottery taxes, State cesses and surcharges, Entry tax not in lieu of octroi.

Stamp duties and real estate taxes are imposed by municipal authorities and vary across states. A separate securities transaction tax (varying between 0.01% and 0.125%) continues to apply. Some demerit and luxury items are subject to a compensation cess (rates vary).

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Corporate Taxes

Company Tax
Domestic companies and partnerships: 30%

The effective tax (including surcharge and health and education cess) can range from 31.20% (income below INR 10 million); 33.38% (income between INR 10 and 100 million); and 34.94% (income over INR 100 million)
Tax Rate For Foreign Companies
A resident company is taxed on its worldwide income. A non-resident company is taxed only on its Indian-sourced income.
Non-resident companies and branches of foreign companies are taxed at a rate of 40% instead of 30%, plus a health and education cess and a surcharge depending on the turnover value (consult the corporate income rates section for further details).

An equalization levy of 6% on the amount of consideration in excess of INR 100,000 for specified services received by a non-resident without a permanent establishment in India must be withheld by a resident payer or a non-resident payer with a PE in India.

Capital Gains Taxation
Tax treatment varies on long term (assets held for more than 3 years, listed shares and certain securities held for more than 1 year, unquoted shares and real estate held for more than two years) and short-term capital gains. Long-term gains on listed shares and securities are taxed at 10% (with no inflation adjustment) or exempt for the first INR 100,000 if subject to the securities transaction tax (STT). Long-term gains obtained by a non-resident on unquoted shares are also taxed at 10% (with no inflation or exchange rate adjustment). Long-term gains on other types of assets are taxed at 20% with inflation adjustment (plus the surcharge and health and education cess). Short-term gains are taxed at ordinary tax rates or at 15% if subject to the STT (a surcharge and an education cess apply to these gains).
Main Allowable Deductions and Tax Credits

In general, expenses are deductible if they are incurred wholly and exclusively for business or professional purposes, not in the nature of a personal expense, and if they are not capital in nature.
Allowable deductions include wages and salaries, bonuses and commissions, rent, repairs, insurance, royalty payments, certain taxes (sales, municipal, road, property and expenditure taxes, customs duties), interest, lease payments, depreciation, expenditure for materials and scientific research, etc. One-fifth of start-up expenditure is allowed as a yearly deduction, over a period of five years. Bad debts can be allowed as a tax-deductible write-off if they have been written off as irrecoverable.
Any charitable contribution made by a company to any charity is allowed as a tax-deductible expense (conditions apply), in a range from 50% to 100% of the charitable contribution, depending upon the nature of charity. No deduction shall be allowed in respect of contribution made in cash exceeding INR 2,000. If a business has opted for the reduced rate of tax of 22% under new tax regime, it is not allowed to claim deductions of charitable contributions (from FY 2020-21 onwards).
Losses can be carried forward and set off against income from the subsequent year (business and capital losses for 8 years), while carrybacks are not allowed.

Various incentives are provided for companies carrying out specific business activities in India, for example:

  • A 10-year tax holiday on 100% profits for developing, operating or maintaining infrastructure, power or network and distribution facilities
  • A 7-year tax holiday on 100% profits for qualifying production of mineral oil and natural gas
  • A 10-year tax holiday on 100% profits for developing a Special Economic Zone (SEZ)
  • A 5-year tax holiday on 100% profits for operating and maintaining hospitals in rural areas
  • A 5-year tax holiday on 100% profits plus a 5-year tax holiday on 50% profits from export from a new undertaking, satisfying prescribed conditions and set up in an SEZ (available if the activities started before 30 June 2020)
  • A tax exemption up to 100%for financial contributions to research institutes (restricted to certain industries)
  • A concessionary tax rate of 10% (plus surcharge and cess) on income by way of royalty in respect of a patent developed and registered in India by a resident in India ("Patent Box regime").
Other Corporate Taxes
Indian companies distributing or declaring dividends are liable to pay DDT (dividend distribution tax) at 15%. This rate is required to be grossed up; consequently, the effective rate of DDT is 20.36%. However, the Finance Act 2020 has abolished the DDT with effect from 1 April 2020, hence dividends distributed after that date will be taxable in the hands of shareholders (20% for dividends paid to non-residents; at the normal tax rates applicable to the shareholders for dividends paid to residents).

A securities transaction tax is applicable to transactions involving the purchase/sale of equity shares, derivatives, units of equity-oriented funds through a recognised stock exchange, or the purchase/sale of a unit of an equity-oriented fund to any mutual fund. The rates vary from 0.01% to 0.125%, depending upon the type of securities.

A property tax is levied by the governing authority of the jurisdiction in which the property is located, with rates varying from city to city. Stamp duties apply to all legal property transactions, with different rates being set by each state.

Social contributions paid by the employer amount to 12% of the employees’ salary (8.33% are allocated to the Employees’ Pension Fund, capped at INR 15,000/month for Indian employees). A reduced tax rate can apply for individual and Hindu Undivided Family (HUF) taxpayers.

From 1 April 2020, an equalization levy of 2% applies on the consideration from e-commerce supply and services made or provided by an e-commerce operator without a PE in India, and whose sales, turnover, or gross receipts from the e-commerce supply and services are at least INR 20 million during the tax year. Sale of goods or provision of services by an e-commerce operator to an e-commerce participant is subject to a 1% withholding tax.
An equalization levy of 6% on the amount of consideration in excess of INR 100,000 applies with regard to specified services (e.g. online advertising, the provision of digital advertising space, and other related facilities or services) received by a nonresident without a permanent establishment in India. The levy must be withheld by a resident payer or a non-resident payer with a permanent establishment in the country.

Other Domestic Resources
Income Tax Department
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 10.9 26.7 10.6 9.0
Time Taken For Administrative Formalities (Hours) 251.9 273.5 175.0 218.0
Total Share of Taxes (% of Profit) 49.7 43.9 36.6 48.8

Source: Doing Business, Latest available data.

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Individual Taxes

Tax Rate

Taxation Income (INR) Progressive Tax Rate up to 30%
Less than 250,000 0% (exempt from income tax and the 4% health education cess; exemption limit raised to INR 300,000 for resident senior citizens with ages 60-80 and INR 500,000 for ages above 80)
250,001 – 500,000 5%
500,001 – 1,000,000 20%
1,000,001 and above 30%
Surcharge In addition to the income-tax, a surcharge (SC) of 10% is to be levied where the total income of individuals is between INR 5 to 10 million; 15% where the total income of individuals is between INR 10 and 20 million; 25% between INR 20 and 50 million; 37% above 50 million
On income arising on account of long-term capital gains, the rate of surcharge would be capped at 15%.
Health and education cess 4% of the income tax and surcharge
Tax rebate Resident individuals are eligible for a tax rebate of the lower of the income-tax or INR 12,500 where the total income does not exceed INR 500,000
New Personal Tax Regime (NPTR) - optional regime effective from 1 April 2020
The taxpayer renounces to certain deductions or exemptions (consult the "Deduction" section)
Less than 250,000 0%
250,000 – 500,000 5%
500,000 - 750,000 10%
750,000 - 1,000,000 15%
1,000,000 - 1,250,000 20%
1,250,000 - 1,500,000 25%
1,500,000 and above 30%
Alternative minimum tax (AMT)
Applicable to business or profession income
18.5% (plus surcharge and health and education cess) on the adjusted total income.
Allowable Deductions and Tax Credits
Deductions are allowed for contributions to life insurance; recognised provident funds; national savings certificates; the national savings scheme; income from certain mutual funds and dividends; certain educational expenses; life insurance premium on the life of self, spouse, or any child (up to INR 150,000); health insurance premiums, including those paid for dependent parents. In case of partial withdrawal from the National Pension Scheme by employees, 25% of their own contribution is exempt from tax in the year of withdrawal.

Individuals can claim a deduction for interest paid on a loan taken for the purpose of their higher education or of their relative.

On donation of a certain amount to specifically approved funds, charitable institutions, etc., an individual can claim a deduction of 50% to 100% of the amount donated, subject to certain legal restrictions. Deduction for funds, charitable institutions in excess of INR 2,000 to be allowed only when the donation is not made in cash. Following the COVID-19 outbreak, the government has set up a special "PM CARES Fund", with the donations made to the fund being 100% deductible without any cap.
Expenses relating to business income are deductible.

Following the introduction of the new optional personal tax regime, individuals who opt for such regime renounce to certain deductions or exemptions, including: house rent allowance; leave travel allowance; allowance under section 10(14) of the Income-tax Act (with some exceptions); standard deduction of INR 50,000 and deduction for professional tax; exemption of free food and beverages through vouchers provided by the employer; deduction of interest payment on housing loans for self-occupied property and restrictions on set-off of loss from let out property; relocation allowance; helper allowance; children education allowance; all Chapter VIA deductions of the Income-tax Act available for expenditure by way of employee’s contribution to provident fund, insurance premium, donations, medical premium, etc., except employer’s contribution to a notified pension scheme, such as National Pension Scheme (NPS). For further information, click here.

Special Expatriate Tax Regime
No special exemptions or deductions, as remuneration for foreign expatriates working in India is deemed to be earned as salary in Indian territory. However, foreigners who visit India on short-term business trips can claim an exemption under domestic tax law or a relevant tax treaty.

A foreign worker who is a citizen of a country with which India has signed a social security agreement is not required to contribute to the social security system if he/she is contributing to his/her home country’s social security, either as a citizen or resident, and enjoys the status of "detached worker" for the period, and according to the terms, specified in the relevant agreement.

Dividend income to a non-resident received on or after 1 April 2020 would be subject to tax in the hands of the shareholder at the rate of 20% unless a lower rate applies due to a tax treaty.

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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
Dividend: 10% when paid to a resident corporation/individual (7.5% between 14 May 2020 and 31 March 2021)/20% when paid to a non-resident corporation/individual (10% for dividends paid on foreign currency bonds or global depository receipts), plus surcharge and chess.

Interest: 10% when paid to a resident corporation/individual (7.5% between 14 May 2020 and 31 March 2021)/20% when paid to a non-resident corporation/individual. If the interest income derived by a non-resident does not fulfil the conditions prescribed by the law for concessional WHT rates, a rate of 30% (for individuals and entities other than a foreign company) or 40% (for a foreign company), plus the applicable surcharge and cess, will apply.

Royalties: 2% where the royalty is paid to a resident corporation/individual and is in the nature of consideration for the sale, distribution, or exhibition of cinematographic films; otherwise, the rate is 10% (1.5% and 7.5%, respectively, between 14 May 2020 and 31 March 2021)/ 10% when paid to a non-resident corporation/individual, plus surcharge and chess.

The rates may be reduced under a tax treaty.

Bilateral Agreement
Spain and India signed a Double Taxation Treaty.

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Actualitzacions: October 2022

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