Incentives and taxation in India

Over the past ten years, changes have been made to the Indian taxation system, resulting in improved compliance and easier tax payment.

The National Board of Direct Taxes (CBDT), which functions under the auspices of the Finance Ministry of the central government, is responsible for administering the Income Tax Act in India.

Get tax exemptions under section 80g of the income tax act.

The Indian tax year lasts from April 1 to March 31 of the following year. Companies must submit their tax returns by September 30 of the year after the tax year ends, with the exception of those who must submit a transfer pricing accountant's report for certain domestic or foreign transactions. By the 30th of November after the end of the tax year, businesses that are required to submit a transfer pricing accountant's report must file their tax returns.

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While a non-resident corporation is only taxed on revenue that is received in India, accrues or arises in India, or is presumed to accrue or arise in India, a resident company is taxed on income from all sources. Income accruing or arising in India is defined as income that comes directly or indirectly through:-

(a) Any commercial ties to India;

(b) all Indian real estate,

(c) a possession or income source in India,

(d) a capital asset transfer to India.

It also includes revenue that is taxed under the source-rule system, such as interest income, royalties, and fees for technical services.

Spending that is done totally and solely for business purposes is permitted as a deduction for calculating taxable business income, subject to certain calculation rules.

Any advantageous clauses in a tax treaty that India has signed with another country would apply to how a non-resident of India gets taxed. Around 92 nations, including the UK, and India have signed Double Taxation Avoidance Agreements (DTAs).

Tax incentives and deductions in India

To encourage a competitive environment and industrial advancement, Special Economic Zones (SEZs) have been established all across the nation. Although they may be phased down under the DTC, developers and occupants of SEZs benefit from significant long-term tax breaks and benefits that are worth researching when starting an enterprise in India.

For a period of up to 10 years, depending on the sector and project, new businesses carrying out specific operations within certain designated sectors (including infrastructure, electricity, and energy) may also be eligible for certain tax deductions on earnings. Various tax benefits and deductions are also available to new businesses operating in certain northeastern Indian states. Companies are recommended to reference the sector-specific plan for details on eligibility, duration, and the tax exemption schedule.

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