India

Corporate taxation

The corporate tax rate in India for domestic companies is 25% or 30% depending on turnover. Domestic corporations incur a surcharge of 10% on income over INR 10 million.

Foreign companies with Permanent Establishments in India are taxed at 40% and incur a surcharge of 2% on income over INR 10 million and 5% on income over INR 100 million. An additional 3% education cess is payable on corporate income taxes (including surcharges).

A minimum alternate tax (MAT) is levied at 15% of the adjusted profits of companies where the tax payable is less than 15% of book profits. MAT does not apply to some types of income of foreign companies.

Transfer pricing

A separate code on transfer pricing under Sections 92 to 92F of the Indian Income Tax Act, 1961 (the Act) covers intra-group cross-border transactions. The code is broadly based on OECD TPG and describe the various transfer pricing methods, impose extensive annual transfer pricing documentation requirements. The code prescribes that income arising from international transactions or specified domestic transactions between associated enterprises should be computed having regard to the arm’s-length price. It has been clarified that any allowance for an expenditure or interest or allocation of any cost or expense arising from an international transaction or specified domestic transaction also shall be determined having regard to the arm’s-length price. The Act defines the terms ‘international transactions’, ‘specified domestic transactions’, ‘associated enterprises’ and ‘arm’s-length price’.

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Transfer Pricing Case Law

Case NameDescriptionDateCountryKeywords