In addition to the Legal- Let's now look at the most important aspects from this area Tax Compliance (Indian tax law).
Around direct taxes we would particularly like to focus on the income tax (defined in Income Tax Act 1961). The responsibility lies with the Indian tax administration, the so-called Income Tax Department, Government of India.
Around indirect taxes There has been a lot of talk about the newly introduced in recent years GST (Goods and Services Tax; Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs), which replaced the majority of all indirect taxes in India on July 1, 2017, is hotly debated. With the GST we have ourselves in previous articles already busy.
(Corporate) Income Tax Rates
Indian tax law makes a distinction “Trade & corporate tax” between
- Domestic Companies: Partnerships and corporations based in India and registered with the RoC, regardless of whether the owner is in India or abroad - see Legal Compliance/Companies Act 2013
- Foreign Companies: includes Liaison-, branch & project offices or the topic (unwanted) tax permanent establishment in India.
On the profits of Domestic or Foreign Companies The following effective tax rates result (including 3 percent education cess):
Source: India foreign trade report from the WKO
(https://webshop.wko.at/publikationen/aussenwirtschaft/asien/indien.html)
Tax compliance requirements & deadlines
The Indian tax year begins on April 1st and ends on March 31st.
Income tax is payable in advance on June 15th, September 15th, December 15th and March 15th.
The Financial statements, Statutory Audit (statutory audit) as well as the Tax declaration must be submitted online by October 31st (e-Filing).
You can find all dates for payments and filings here official tax calendar.
Notes
On the topics Withholding tax and Transfer pricing we'll go into it in the next articles.
Double taxation of foreign companies
Double taxation is possible if, for example, the German tax office does not see a permanent establishment in India, but the Indian Income Tax Department does.
Minimum Alternate Tax (MAT)
If the amount of taxes paid is less than 18,5 percent of the book profit, the difference to the retained profit must be taxed at 18,5 percent (plus 3 percent education cess) (Minimum Alternate Tax).
Further information on the topic Corporate Income Tax can be found on the website of Income Tax Departments.
Personal income tax
We do not want to go into the income tax of natural persons any further at this point. In principle, every natural person who stays in India for a period of 183 days or more (during a financial year) is subject to tax and needs a so-called PAN (Permanent Account Number). You can find the current tax rates here.
