Verified Facts
Tax rates in India range from 5% to 30% for individuals, with a corporate tax rate of 25% for companies with a turnover of up to INR 400 crore, and 15% for new manufacturing companies, while the standard Goods and Services Tax (GST) rate is 18%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
India has a worldwide taxation system, where residents are taxed on their global income, whereas non-residents are taxed only on their Indian-sourced income. The residency rules for tax purposes in India are based on the number of days an individual spends in the country. An individual is considered a resident if they spend at least 182 days in India in a financial year, or if they spend at least 60 days in India in a financial year and have spent at least 365 days in the preceding four years.
The Indian tax system is complex, with various tax laws and regulations governing different types of income and taxes. The tax authorities in India are the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC), which are responsible for administering and enforcing tax laws. The tax year in India runs from April 1 to March 31, and taxpayers are required to file their tax returns by July 31 of each year.
Personal Income Tax
| Income Bracket (INR) | Tax Rate |
|---|---|
| 0 - 250,000 | 0% |
| 250,001 - 500,000 | 5% |
| 500,001 - 750,000 | 10% |
| 750,001 - 1,000,000 | 15% |
| 1,000,001 - 5,000,000 | 20% |
| 5,000,001 and above | 30% |
| Taxpayers in India are eligible for various deductions and allowances, such as deductions for savings, investments, and home loan interest, as well as allowances for housing, transportation, and education. Taxpayers are required to file their tax returns online, and the deadline for filing tax returns is July 31 of each year. Taxpayers can also claim tax credits for taxes paid in other countries, subject to certain conditions. |
Corporate & Business Tax
- The corporate tax rate in India is 25% for companies with a turnover of up to INR 400 crore, and 15% for new manufacturing companies.
- Small businesses with a turnover of up to INR 2 crore are eligible for a presumptive taxation scheme, where they can pay tax at a rate of 8% of their turnover.
- India has several free trade zones and special economic zones, which offer tax incentives and other benefits to businesses.
- Companies are required to register with the Ministry of Corporate Affairs and obtain a PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) to comply with tax laws.
- Businesses are also required to comply with Goods and Services Tax (GST) laws, which require them to register and file GST returns.
VAT / Sales Tax
- The standard GST rate in India is 18%, but there are also lower rates of 5%, 12%, and 28% for different types of goods and services.
- Certain goods and services, such as basic food items and healthcare services, are exempt from GST.
- Tourists can claim a refund of GST paid on goods purchased in India, subject to certain conditions.
- Businesses are required to register for GST if their turnover exceeds INR 40 lakh, and they must file GST returns on a monthly or quarterly basis.
For Expats & Foreign Workers
- Expats and foreign workers are considered non-residents for tax purposes if they spend less than 182 days in India in a financial year.
- India has double taxation treaties with 88 countries, which help to avoid double taxation of income.
- Expats and foreign workers are required to obtain a PAN (Permanent Account Number) and Aadhaar (Unique Identification Number) to comply with tax laws.
- Expats and foreign workers may be eligible for a tax exemption on their foreign-sourced income, subject to certain conditions.
- Expats and foreign workers are required to comply with social security laws, which require them to contribute to the Employees' Provident Fund and other social security schemes.
- Remittances of income earned in India are subject to tax withholding, and expats and foreign workers must comply with foreign exchange regulations when remitting money abroad.
Crypto & Investment Income
- Investment income, such as dividends and interest, is taxable in India, and taxpayers must declare it in their tax returns.
- Capital gains from the sale of investments, such as stocks and mutual funds, are taxable, and the tax rate depends on the type of investment and the holding period.
- Cryptocurrency transactions are subject to taxation in India, and taxpayers must declare their cryptocurrency income in their tax returns.
- Taxpayers can claim a tax deduction for losses incurred on investments, subject to certain conditions.