Complete guide to tax implications for foreign companies in India. Learn about corporate tax rates, GST, TDS, transfer pricing, DTAA benefits, and tax compliance requirements for foreign subsidiaries and branch offices.
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Foreign subsidiaries taxed as Indian companies. Branch offices taxed at 40% plus surcharge.
GST registration required if turnover exceeds ₹20 lakhs. Monthly/quarterly returns mandatory.
TDS on salaries, professional fees, rent, interest. Rates vary from 1% to 30% depending on payment type.
Transactions with related parties must be at arm's length price. Documentation and reporting required.
Tax on payments to non-residents. DTAA benefits may apply to reduce rates.
Advance tax payable in 4 installments if estimated tax exceeds ₹10,000.
Foreign subsidiaries are taxed as Indian companies: 25% for companies with turnover up to ₹400 crores, 30% for others. Branch offices are taxed at 40% plus surcharge and cess. Liaison offices have minimal tax as they cannot earn income.
Yes, foreign companies operating in India must register for GST if their turnover exceeds ₹20 lakhs (₹10 lakhs for special states). They must file monthly/quarterly GST returns and comply with GST regulations.
Tax Deducted at Source (TDS) applies to payments made by foreign companies to residents. Foreign companies must deduct TDS on salaries, professional fees, rent, interest, and other payments as per Indian tax laws.
Transfer pricing rules apply when foreign companies transact with related parties. Transactions must be at arm's length price. Companies with transactions above threshold must maintain transfer pricing documentation and file reports.
Double Taxation Avoidance Agreement (DTAA) prevents double taxation between India and other countries. Foreign companies can claim tax credits or exemptions under DTAA. India has DTAA with over 90 countries.
Branch offices are taxed at 40% plus surcharge and cess on their Indian income. They are also subject to GST, TDS, and other Indian tax laws. Branch offices can remit profits after payment of taxes.
Yes, foreign companies operating in India must file corporate income tax returns annually. They must also file GST returns, TDS returns, and other statutory returns as applicable.
Foreign companies must pay advance tax in installments if estimated tax liability exceeds ₹10,000. Advance tax is payable in 4 installments: 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15.
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