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%

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20 Comments on Corporate Taxes in India

  1. pradipsinh zala says:

    Dear Sir,

    i want to start salt business so please help me which types of tax i have to pay if i start a business with enterprise pvt. ltd. in ahmedabad, gujarat.

    pradipsinh zala

  2. blessi says:

    1. Is there a seperate tax rate for only dividends recieved, for domestic companies?
    2. Do the above tax rates hold for the current yr?

  3. sangamesh says:

    Hi prad.

    Please note that if u start business you need to pay tax on the income earned by salt business. Which is direct tax
    Hope it help


  4. Navaneedhan says:

    Hello Sir,
    I am from Tamil Nadu. I plan to start a Garments in my own state. I want to know whether Sales Tax Percentage change from state to state. What will be the penalty if I did not pay the Sales tax with in the time period.

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