*18% is the general GST rate; actual rates range 5-28% across different goods and service categories.
India taxes residents (ordinarily resident) on worldwide income; residents-but-not-ordinarily-resident and non-residents are taxed only on India-source income (and foreign income only to the extent derived from an Indian business or profession, for the intermediate category). India operates a self-assessment system. Rates and rules described on this page are central government figures: income tax itself is a central, not state, levy and does not vary by state, but Goods and Services Tax includes a state-level component (SGST, alongside the central CGST) and stamp duty, professional tax, and property tax are all set independently by each state, sometimes varying significantly; confirm state-specific indirect tax and stamp duty rates separately for a given transaction.
The Indian tax year (Financial Year, FY) runs 1 April to 31 March. The individual filing deadline (for the corresponding Assessment Year) is generally 31 July following the end of the financial year for taxpayers not subject to audit, with a later deadline (commonly 31 October) for taxpayers whose accounts require audit.
India's headline corporate income tax (CIT) rate is 25% or 30% domestic (turnover-dependent); 35% foreign companies with PE.
The headline personal income tax (PIT) rate is 39% new regime; 42.744% old regime (top).
The standard VAT/GST (or equivalent consumption tax) rate is 5-28% (GST, general rate 18%).
Under Section 6 of the Income Tax Act (re-enacted as the Income Tax Act, 2025, with residency rules unchanged from the prior 1961 Act), an individual is an Indian tax resident if they are present in India for 182 days or more in the tax year, or 60 days or more in the tax year plus 365 days or more across the preceding four years (extended to 182 days for Indian citizens/crew leaving for employment abroad, and to 120 days for citizens or persons of Indian origin visiting India with India-sourced income exceeding INR 1.5 million). A resident is further classified as "Not Ordinarily Resident" (RNOR) - taxed only on India-sourced income plus limited foreign income - unless they meet stricter "Ordinarily Resident" tests (resident in at least 2 of the preceding 10 years, and present 730+ days across the preceding 7 years). Non-residents are taxed only on India-sourced income.
A non-Indian entity has an Indian permanent establishment through a fixed place of business, a dependent agent habitually concluding contracts in India on the entity's behalf, or a service PE where personnel provide services in India exceeding a specified duration (commonly 90 days in a 12-month period under many of India's treaties, though the precise threshold depends on the specific treaty), or a "significant economic presence" test targeting digital businesses with substantial India-facing transactions or user engagement even absent physical presence.
India currently has no Controlled Foreign Company regime. Undistributed profits of a foreign subsidiary controlled by Indian residents are not automatically attributed to Indian shareholders under a CFC-style rule; India instead relies on transfer pricing rules and the General Anti-Avoidance Rule (GAAR, in effect since assessment year 2018-19) to address profit-shifting arrangements.
Section 94B of the Income Tax Act (introduced by the Finance Act 2017, implementing OECD BEPS Action 4) caps deductible interest paid by an Indian company or the Indian permanent establishment of a foreign company to a non-resident associated enterprise at the lower of 30% of EBITDA or the actual interest paid to associated enterprises. The rule applies only where such interest exceeds INR 1 crore (10 million) in the year; banking and insurance businesses are excluded, and disallowed interest may be carried forward up to eight assessment years.
India does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics under Indian law. India has not implemented a comprehensive ATAD2-style anti-hybrid regime in the EU sense, relying instead on its General Anti-Avoidance Rule (GAAR, in effect since assessment year 2018-19) and transfer pricing rules to address abusive cross-border arrangements involving hybrid structures.
An Indian resident and ordinarily resident individual (not applicable to non-residents or residents-but-not-ordinarily-resident) must disclose foreign assets and foreign income in Schedule FA of their annual income tax return, including foreign bank accounts, foreign equity/debt interests, foreign trusts, and any other foreign capital assets, regardless of value - there is no minimum threshold, unlike most other countries' domestic regimes. Failure to disclose can trigger penalties of INR 1,000,000 under India's Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, separate from ordinary income tax penalties. This is India's own domestic foreign-asset reporting regime, distinct from India's separate participation in CRS automatic exchange described under Treaty Network below.
India does not provide a general participation exemption for foreign dividends received by an Indian company in the European sense; foreign dividends are generally taxable at ordinary corporate rates, with relief from double taxation provided through India's foreign tax credit system (see Foreign Tax Credit below) rather than an outright exemption.
India has a real foreign tax credit regime available to both individuals and companies for foreign tax paid on foreign-source income also taxed in India, capped at the lower of the foreign tax paid or the Indian tax attributable to that income, claimed via Form 67 filed before the due date of the return.
India has concluded roughly 94 comprehensive Double Taxation Avoidance Agreements (DTAAs) plus a further eight limited-scope agreements, one of the largest treaty networks among emerging economies. India ratified the OECD's BEPS Multilateral Instrument (MLI) effective October 1, 2019, which modifies many of these treaties to add anti-abuse measures such as the Principal Purpose Test.