Corporate taxation in India is a complex system that includes various types of taxes such as income tax, GST, VAT, sales tax, customs duty, and export duty. Each type of tax has its own rates and legislation that govern them. It is important for companies operating in India to understand the different types of taxes and their rates to ensure compliance with the law.
Income tax is levied on the income earned by companies in India. The rate of income tax varies based on the income earned by the company. The following are the current income tax rates for companies in India:
- For domestic companies with a turnover of up to INR 400 crores: 25%
- For domestic companies with a turnover of more than INR 400 crores: 30%
- For foreign companies: 40%
The Income Tax Act, 1961, governs the income tax in India.
GST is a value-added tax that is levied on the supply of goods and services in India. It replaced various indirect taxes such as VAT, excise duty, and service tax. The following are the GST rates for different goods and services:
- Essential items such as food grains, milk, and educational services: 0%
- Commonly used goods and services such as clothes, footwear, and public transport: 5%
- Goods and services that fall under the standard rate: 12%
- Luxury items such as cars, aerated drinks, and cigarettes: 18%
- Goods and services that fall under the highest rate: 28%
The Central Goods and Services Tax Act, 2017, governs GST in India.
VAT and Sales Tax: VAT and sales tax are levied on the sale of goods in India. VAT is levied by the state government, while sales tax is levied by the central government. The following are the VAT and sales tax rates in India:
- VAT rates vary by state and range from 1% to 15%.
- Sales tax rates vary by product and range from 0% to 30%.
The Central Sales Tax Act, 1956, and the respective state VAT laws govern VAT and sales tax in India.
Customs duty is levied on the import and export of goods in India. The rate of customs duty varies based on the type of goods being imported or exported. The following are the current customs duty rates for different types of goods:
- Basic customs duty rates range from 0% to 150%.
- Countervailing duty rates range from 0% to 12%.
- Special additional duty rates range from 4% to 10%.
The Customs Act, 1962, governs customs duty in India.
Export duty is levied on the export of certain goods from India. The rate of export duty varies based on the type of goods being exported. However, currently, there are no export duties levied on goods exported from India.