India’s tax system is structured with progressive personal income tax rates reaching up to 30% and corporate tax at a flat 30%, plus surcharges and cess. The country does not impose wealth, inheritance, or gift taxes, though certain transfers may be taxable. India follows OECD guidelines for Transfer Pricing and has strong anti-avoidance rules, including General Anti-Avoidance Rules (GAARs). With an extensive network of Double Tax Treaties (DTTs) and international compliance measures like CRS and FATCA, India’s tax regime balances domestic needs with global transparency.
India’s Tax System overview
| Corporate Income Tax: | 30% |
| Personal Income Tax: | 30%, progr. |
| Gift Tax: | None |
| Inheritance Tax: | None |
| Wealth Tax: | None |
Legal System
India is a parliamentary democracy, and applies a mix of common law, civil law and religious laws (Hindu, Muslim and Christian).
Currency and Exchange Controls
The currency is the Indian Rupee, and is subject to foreign exchange controls.
Corporate Income Tax
Corporations resident in India are taxed on worldwide income at a standard rate of 30%, plus surcharge and Cess.
Personal Income Tax
Indian residents are taxed on worldwide income at progressive rates of up to 30%, plus surcharge and Cess. Certain transfers made gratuitously or at an undervalue to non-relatives may be taxable as income, India does not impose inheritance tax or wealth tax.
Anti-Avoidance Rules
India has General Anti-Avoidance Rules (GAARs). India has Transfer Pricing rules that follow the OECD guidelines. India has no Thin Capitalization or Controlled Foreign Corporation (CFC) rules.
Notified Jurisdictional Area
A Notified Jurisdictional Area (NJA) is one which has no effective exchange of information with India, and has been designated as an NJA. Transfer Pricing rules apply, and payments to persons located in NJAs are subject to a withholding tax at 30%.
Foreign Trusts
India has a domestic trust law, The Indian Trusts Act (1882). India is not party to The Hague Convention on Trusts, but foreign trusts are recognized under Indian laws. Trusts, whether foreign or domestic, are not taxable entities. In general, Indian resident settlors of foreign revocable trusts remain liable for tax on undistributed income, and Indian resident beneficiaries of foreign discretionary trusts are not taxable on undistributed income.
Double Tax Treaties (DTTs)
India has DTTs with a number of jurisdictions, including Austria, Canada, Cyprus, Denmark, Hungary, Luxembourg, Malta, Mauritius, Netherlands, New Zealand, Singapore, Spain, Switzerland, UK and the US.
OECD Multilateral Convention
India is a party to the OECD Convention on Mutual Administrative Assistance in Tax Matters. Signatories are required to exchange information “on request,” and are authorized to exchange information spontaneously and automatically.
Common Reporting Standard (CRS)
India has adopted CRS for the automatic exchange of account information, has signed the Multilateral Competent Authority Agreement (MCAA), and has a number of activated relationships.
FATCA
India has entered into a FATCA Model 1 IGA with the US for the automatic exchange of information.
