Taxes and duties in India
Foreign companies in India are required to pay tax on net income earned in India. The rates of taxes differ for the various legal entities:
- Companies: companies incorporated in India are required to pay 30% tax + surcharge + education cession on net income earned. It is also required to deduct tax on profits distributed at 15.5% + surcharge + education cession.
- Representative, branch or project offices: All three offices are required to pay 40% tax + surcharge + education cession. There is no tax on profits distributed.
- LLPS: LLPS are required to pay tax 30% + surcharge + education cession. There is no tax on profits distributed.
Introduction of GST system
The Indian government is preparing to introduce the new Goods and Services Tax (GST) Centre, which will integrate current national and state level tax structures for VAT, excise duty, customs duty and service tax. The government has circulated a draft law in December 2015 which will most likely be in place second half of 2016.