Retained
- Statutory Tax Rate30
- Surtax Based on Taxable Income0
- Surtax Based on Statutory Tax16.48
- Surtax Deductible from Taxable Income0
- Statutory Tax Deductable0
- Effective Tax Rate34.944
Statutory Tax Rate
The basic corporate tax rate for Indian resident companies is 30% which, with applicable surcharge and cess, results in effective rates as follows:
|
Taxable Income |
Basic Rate |
Surcharge & Cess* |
Effective Tax Rate |
|
Up to INR 10 million |
30% |
0% |
31.20% |
|
Exceeds INR 10 million up to INR 100 million |
30% |
7% |
33.38% |
|
Exceeds INR 100 million |
30% |
12% |
34.94% |
* The Health and Education Cess of 4% applies on the tax amount including surcharge.
Further, a number of other rates and optional regimes also apply as follows:
|
Taxable Income |
Basic Rate |
Surcharge |
Cess |
Effective Tax Rate |
|
Companies with total turnover or gross receipts not exceeding INR 4 billion during the financial year 2018-19. |
25% |
0%/7%/12% |
4% |
26%/27.82%/29.12% |
|
Optional regime applies to companies registered on or after 1 March 2016 engaged in manufacturing activity and related research. |
25% |
0%/7%/12% |
4% |
26%/27.82%/29.12% |
|
Optional regime effective from 1 April 2019 wherein companies may apply an optional reduced corporate tax rate. |
22% |
10% |
4% |
25.17% |
|
Optional regime applies to companies (not covered under the above optional regimes) that are registered on or after 1 October 2019 and commenced manufacturing, including generation of electricity, on or before 31 March 2024. |
15% |
10% |
4% |
17.16% |
The companies opting for the regime can apply the reduced tax rate without claiming certain specified deductions.
Until 31 March 2020, DDT applied on dividends distributed by Indian companies at the rate of 15% (plus applicable surcharge and cess). The DDT has been abolished with effect from 1 April 2020. Consequently, dividends are taxable in the hands of the recipient at their applicable rates.
Minimum Alternate Tax (MAT)
Under the Minimum Alternate Tax (MAT) provisions the tax liability of a company is higher of the following:
- Tax liability of the company calculated as per the normal provisions of the Income Tax Act; or
- Tax calculated under the MAT provisions on book profits.
The basic rate is 15% (reduced from 18.5% effective from 1 April 2019), with applicable surcharge and cess.
The MAT provisions do not apply to companies that have exercised the option for the reduced corporate tax rates of 22% and 15% (as above).
Effective Tax Rate
The basic corporate tax rate for Indian resident companies is 30% which, with applicable surcharge and cess, results in effective rates as follows:
|
Taxable Income |
Basic Rate |
Surcharge & Cess* |
Effective Tax Rate |
|
Up to INR 10 million |
30% |
0% |
31.20% |
|
Exceeds INR 10 million up to INR 100 million |
30% |
7% |
33.38% |
|
Exceeds INR 100 million |
30% |
12% |
34.94% |
* The Health and Education Cess of 4% applies on the tax amount including surcharge.
Further, a number of other rates and optional regimes also apply as follows:
|
Taxable Income |
Basic Rate |
Surcharge |
Cess |
Effective Tax Rate |
|
Companies with total turnover or gross receipts not exceeding INR 4 billion during the financial year 2018-19. |
25% |
0%/7%/12% |
4% |
26%/27.82%/29.12% |
|
Optional regime applies to companies registered on or after 1 March 2016 engaged in manufacturing activity and related research. |
25% |
0%/7%/12% |
4% |
26%/27.82%/29.12% |
|
Optional regime effective from 1 April 2019 wherein companies may apply an optional reduced corporate tax rate. |
22% |
10% |
4% |
25.17% |
|
Optional regime applies to companies (not covered under the above optional regimes) that are registered on or after 1 October 2019 and commenced manufacturing, including generation of electricity, on or before 31 March 2024. |
15% |
10% |
4% |
17.16% |
The companies opting for the regime can apply the reduced tax rate without claiming certain specified deductions.
Until 31 March 2020, DDT applied on dividends distributed by Indian companies at the rate of 15% (plus applicable surcharge and cess). The DDT has been abolished with effect from 1 April 2020. Consequently, dividends are taxable in the hands of the recipient at their applicable rates.
Minimum Alternate Tax (MAT)
Under the Minimum Alternate Tax (MAT) provisions the tax liability of a company is higher of the following:
- Tax liability of the company calculated as per the normal provisions of the Income Tax Act; or
- Tax calculated under the MAT provisions on book profits.
The basic rate is 15% (reduced from 18.5% effective from 1 April 2019), with applicable surcharge and cess.
The MAT provisions do not apply to companies that have exercised the option for the reduced corporate tax rates of 22% and 15% (as above).
Distributed
- Statutory Tax Rate40
- Surtax Based on Taxable Income0
- Surtax Based on Statutory Tax9.2
- Surtax Deductible from Taxable Income0
- Statutory Tax Deductable0
- Effective Tax Rate43.68
Statutory Tax Rate
The basic corporate tax rate for foreign companies and branches of foreign companies is 40% which, with applicable surcharge and cess, results in effective rates as follows:
|
Taxable Income |
Basic Rate |
Surcharge & Cess* |
Effective Tax Rate |
|
Up to INR 10 million |
40% |
4% |
41.6% |
|
Exceeds INR 10 million up to INR 100 million |
40% |
6.08% |
42.43% |
|
Exceeds INR 100 million |
40% |
9.2% |
43.68% |
* The Health and Education Cess of 4% applies on the tax amount including surcharge.
Minimum Alternate Tax (MAT)
Under the Minimum Alternate Tax (MAT) provisions, the tax liability of a company is higher of the following:
- Tax liability of the company calculated as per the normal provisions of the Income Tax Act; or
- Tax calculated under the MAT provisions on book profits.
The basic rate is 15% (reduced from 18.5% effective from 1 April 2019), with applicable surcharge and cess.
Capital Gains
- Statutory Tax Rate20
- Surtax Based on Taxable Income0
- Surtax Based on Statutory Tax16.48
- Surtax Deductible from Taxable Income0
- Statutory Tax Deductable0
- Effective Tax Rate23.296
Statutory Tax Rate
Capital gains arising from the transfer of capital assets are subject to special tax rates under the Income Tax Act, based on the nature of the relevant capital assets, viz. short-term or long-term. Short-term capital assets are defined as:
- Listed shares/ securities or units of an equity-oriented mutual fund held for not more than 12 months;
- Unlisted shares of a company/ immovable property held for not more than 24 months; and
- Any other capital asset held for not more than 36 months.
Any capital asset not covered above as a short-term asset is considered a long-term capital asset.
Long-term capital gains are calculated after considering the indexed cost of acquisition and the cost of improvement, i.e., the acquisition/ improvement cost is increased by a prescribed multiplier based on the period of holding to adjust for inflation.
The tax rates apply on capital gains arising to residents as follows:
|
|
Long-Term Capital Gains |
Short-Term Capital Gains |
|
Capital gains arising from the transfer of listed shares or specified securities on which securities transaction tax (see Sec. 8.1.3. in India Analysis Chapter) has been paid (effective 1 April 2018). Previously, such gains were exempt.
|
10% (plus applicable surcharge and cess), without indexation benefit, on capital gains exceeding INR 100,000 |
15% (plus applicable surcharge and cess) |
|
Other capital gains |
20% (plus applicable surcharge and cess) |
Standard corporate tax rate (plus applicable surcharge and cess) |