Prikhodko&Partners
Services
International corporate law
Business registration and support in India Tax consulting in India

Mykola Sirenko

Lawyer

E-mail

sirenko@prikhodko.com.ua

Phone numbers

Expert in corporate and international corporate law. Has extensive experience in supporting the acquisition of financial licenses in Ukraine, as well as business incorporation in the EU, the United Kingdom, Switzerland, the UAE, and key Asian jurisdictions.

Tax consulting in India

India is one of the largest economies in the world, which has a positive expansion trend and is attractive to international investors due to its sizeable market and new business opportunities.

However, the tax system of this country is complex and multi-level, which can create difficulties for foreign companies and entrepreneurs without a sufficient level of training.

That is why, to ensure compliance with the law and optimize tax obligations, it is important to obtain professional tax advice before starting direct work in a given jurisdiction.

We, Prikhodko and Partners Law Firm, offer you expert assistance in taxation matters in India, both for businesses and for individuals who are non-residents of this country. In this article, we will look at the main features of the Indian tax system and explain how our services can help you avoid risks and build a successful business.

Main aspects of the Indian tax system

India’s tax system is one of the most complex in the world due to the multi-tiered nature and variety of taxes applied at the federal, state and local levels.

Here are the key elements to consider:

Income tax (Income Tax)
- It applies to both individuals and companies.
- The tax rate for companies depends on the resident status and type of business.
Goods and Services Tax (GST)
- Introduced in 2017, GST replaced a number of other indirect taxes, which must be considered on a case-by-case basis.
- Rates vary depending on the category of goods or services (from 0% to 28%).
Taxes on dividends and capital gains
- Investors should consider the tax on dividends and capital gains from the sale of assets, which can depend on several factors at the same time.
Land and property taxes
- Charged at the state or local government level.
Tax on foreign income
- Residents of India are subject to taxation on global income, which may create a risk of double taxation.
Transfer Pricing
- Applies to related party transactions to avoid profit manipulation.

Let’s consider taxation for individuals in more detail

In India, individual taxes are levied based on income level, source of income and residency status. Tax rates are determined annually in the Federal Budget of the country and are classified according to a progressive scale.

The main aspects of taxation of individuals in India include:

Structure of tax rates
- Earnings up to INR 250,000 (excluding benefits) are tax-free.
- For incomes exceeding this threshold, rates from 5% to 30% are applied, depending on the category:
  - 5% for income up to INR 500,000;
  - 20% for incomes between INR 500,001 and INR 1,000,000;
  - 30% on income above INR 1,000,000.
Tax benefits and discounts
The Indian government provides an opportunity for individuals to reduce their tax liability through various benefits:
- Contributions to pension funds or life insurance.
- Investments in savings account schemes or funds.
- Education or health insurance expenses.
Mandatory submission of the declaration
Individuals must submit an income tax return every year if:
- Their income exceeds the tax-free minimum;
- They want to get a tax refund for advance payments or overpayments.
Income from various sources
Income from the following sources is taxable in India:
- Salary;
- Profit from business or professional activity;
- Profit from property rental;
- Investment income (dividends, interest, etc.).

It will also be useful: Registering a business in Oman

A separate category that should be considered for future taxation is non-resident natural persons

Non-resident individuals deriving income in India are also subject to tax in accordance with the law as in most countries of the world. However, their tax status depends on the length of stay in the country and the source of income.

Criteria for non-resident status
- A person is considered a non-resident if he has stayed in India for less than 182 days during a financial year.
- In some cases, non-resident status may apply even for a shorter stay if there is no significant connection to India.
Taxable income for non-residents
Non-residents pay tax only on income earned or accumulated within India. This includes:
- Income from real estate rental;
- Gains from the sale of assets located in India;
- Income from investments such as dividends or interest in bank accounts in India.
Tax rates for non-residents
- Tax rates for non-residents are generally the same as for residents, but the tax benefits available to Indian citizens are not available to them.
- Certain categories of income, such as interest on bonds, may be taxed at a flat rate (eg 20%).
Avoidance of double taxation
- To avoid double taxation, India has entered into Double Taxation Avoidance Agreements (DTAA) with many countries. This allows non-residents to claim back taxes paid abroad or avoid double taxation of income.
Responsibility for compliance with legislation
Non-residents are required to file income tax returns if they receive taxable income in India, even if tax has been withheld at source.

Whether you are a resident or non-resident of India, it is important to understand your tax obligations and rights.

Our company “Prikhodko and Partners” will provide professional support in solving tax issues, help minimize tax risks and ensure compliance with local legislation.

Our team of experts provides comprehensive tax advisory support in India including:

Analysis of tax liabilities. We assess the specifics of your business and determine the main taxes that apply to your activity.
Optimization of taxation. Our specialists help to develop a strategy that allows you to minimize the tax burden within the framework of the law.
Consultations on international taxation. We help avoid double taxation and ensure compliance with Double Taxation Avoidance Agreements (DTAA).
Assistance with GST registration. Our team will prepare all the necessary documents and ensure a successful registration.
Inspection support. We represent your interests during tax audits and help resolve disputes with tax authorities.
Legislation update. We keep our clients informed of all changes in Indian tax laws that may affect their business.