Corporate Taxes in India

Domestic companies are subject to income tax on all sources of income and capital gains wherever arising.

Foreign companies are subject to income tax only on their income from Indian Sources.

Company tax is levied as follows:	Rates
Domestic companies	33.22%
Foreign companies	42.23%

Note: Where the total income of the domestic or foreign company does not exceed Rupees ten million, no surcharge is levied. In such cases, the effective rate of tax for domestic companies and foreign companies is 30.9% and 41.2% respectively.
However, the following income of foreign companies is taxed at the following specified rates on a gross basis and not at 42.23%.

Royalty and Fees for Technical Services (subject to certain conditions):

• Royalty and Fees for Technical Services received pursuant to an agreement made
– after 31 May 1997 but before 1 June 2005 (if the payment exceeds Rs 10m) 21.12%
– after 1 June 2005 (if the payment exceeds Rs 10m) 10.56%

If the payment does not exceed 10M then the rates would be 20.6% and 10.3% respectively.

• Interest Income 21.12%
• Income from units of Mutual Funds purchased in foreign currency 21.12%
• Income from Global Depository Receipts (GDRs) 10.56%
• Income by offshore funds (overseas company) 10.56%

Income of Foreign Institutional Investors (FIIs) in listed securities:
– Short term capital gains in respect of transactions chargeable to Securities Transaction Tax 15.84%

– Short term capital gains in cases other than the one mentioned above 31.67%

– Long term capital gains (other than those subjected to Securities Transaction Tax) 10.56%

– Other income 21.12%