T4: TAX RATES IN INDIA, INDIVIDUALs & CORPORATE

Corporate and Personal Tax Rates for NRIs

Corporate Tax Rates

  1. For Foreign Companies:

    • Base Rate: The corporate tax rate for foreign companies is 40%.

    • Effective Rate: Often lower due to available deductions and exemptions.

    • Tax Holidays: Available for businesses set up in Special Economic Zones (SEZs) and certain Infrastructure Sector Projects, offering special tax treatment and holidays.

  2. For Domestic Companies:

    • Reduced Rates (2019 onwards):

      • General rate: 22% plus surcharges, leading to an effective tax rate of around 25%.

      • New manufacturing companies: 15% (with conditions, such as no exemptions or deductions allowed).

Personal Income Tax Rates

  1. General Rates:

    • 10%: For income above ₹2.5 lakhs.

    • 20%: For income above ₹5 lakhs.

    • 30%: For income above ₹10 lakhs.

  2. Surcharges and Cess:

    • Surcharge:

      • 10%: For income above ₹50 lakhs.

      • 15%: For income above ₹1 crore.

    • Health and Education Cess: An additional 4% charge on the tax calculated.

Tax-Exempt Incomes for Non-Residents (Section 10 Examples)

  1. Interest on Bonds/Securities:

    • Notified by the Central Government, including premium on redemption.

  2. Interest on NRE Accounts:

    • Interest on money standing to the credit in a Non-Resident (External) account in India.

  3. Remuneration for Foreign Employees:

    • Received by non-Indian citizens as employees of foreign enterprises for services rendered in India, provided:

      • The foreign enterprise is not engaged in trade or business in India.

      • Their stay in India does not exceed 90 days in a previous year.

  4. Salary for Services on Foreign Ships:

    • Salary received by non-residents for employment on foreign ships, provided their total stay in India does not exceed 90 days in the previous year.

Double Taxation Avoidance Agreement (DTAA)

  • Choice of Provisions: A non-resident can apply either the provisions of the Income Tax Act or the relevant DTAA between India and the counterpart foreign country, whichever is more beneficial.

For a detailed list of tax-free incomes and more information, you can refer to the Income Tax of India website.

Leave a Reply