India


A number of independent states was formed in India by the 6th century B.C. Later there were founded the Indo-Greek, Indo-Skythians, Indo-Parthian Kingdoms, and Kushano-Sassanids Empire. Alexander the Great’s conquest of India lasted from 327 to 325 years B.C. There were several dynasties in different times and different regions of India. The period of the Gupta Empire in the 3rd century is called the Golden Age. India was under the Muslim rule in the 10th – 12th centuries. In the 16th century the European countries such as Portugal, Netherlands, France, and Great Britain started their colonization of Indian territories. Denmark, Austria, Sweden, and Prussia conquered just small territories. The British supremacy was established in 1765. India gained its independence in 1947. In three years it was proclaimed a Republic.

Service packages

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Service item Express Standard Optimum
Company registration
Legal address per year
Secretarial services for the first year
Fees and duties for the first year
Apostilled bound set of incorporation documents
Compliance fee
Nominee service per year
Bank Account Pre-approval
Price

7 600 USD

7 600 USD

8 100 USD

I want to order «»

Contact method: and / or

Core Services

7 600 USD

— Incorporation

including incorporation tax, state registry fee, including Compliance fee

100 000 INR (~1400 USD)

— Authorized capital payment

4 200 USD

— Corporate legal services

including registered address and registered agent, NOT including Compliance fee

from 125 USD

—Delivery of documents by courier mail

DHL or TNT, at cost of a Courier Service

500 USD

— Apostilled set of Statutory documents

Optional services

from 4 500 USD

Local Director Services (1 year)

from 3 600 USD

Local secretary services (1 year) (if required)

Related services

Tax Certificate

Company’s tax residence certificate for access to double tax treaties network

Tax ID Certificate

Certificate of Good Standing

Document issued by a state agency in some countries (Registrar of companies) to confirm a current status of a body corporate. A company with such certificate is proved to be active and operating.

Certificate of Incumbency

Compliance fee

Compliance fee is payable in the cases of: renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, change of director / shareholder / BO (except the change to a nominee director / shareholder)

250 USD

Basic

simple company structure with only 1 physical person

50 USD

For legal entity in structure under GSL administration

additional compliance fee for legal entity in structure under GSL administration (per 1 entity)

100 USD

For legal entity in structure not under GSL administration

additional compliance fee for legal entity in structure NOT under GSL administration (per 1 entity)

350 USD

For client with high risk Status

Cost of incorporation, including first year servicing 7600
Cost of annual service, starting from the second year 4200
Open account in 26785
Incorporation timescale for a turnkey company 3-4 weeks
Country 26698

General information shortly

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Total area Population Capital Unemployment Corruption perceptions index rank
3.287.263 sq.km 1.220.800.359 (2013) New Delhi 3.8% (2013) 94 (2013)
Location Southern Asia, bordering the Arabian Sea and the Bay of Bengal, between Burma and Pakistan
National currency Indian rupee
Conditional reduction of currency INR
Against USD 62.46
Climate, average max and min t° varies from tropical monsoon in the south to temperate in the north; in the coldest season (from December to February) average minimum temperature is +6-10°С, average maximum temperature is +21-23°С; in the hottest season (May-June) average minimum temperature is +26-28°С, average maximum temperature is about +40°С
Time difference from Moscow + 1,5 hours
Dialing code +91
State language Hindi
Ethnic groups Indo-Aryan 72%, Dravidian 25%, Mongoloid and other 3%
Literacy rate 64.8%
Credit rating BBB-
Government type parliamentary republic
Executive branch President, Vice-President, and the Council of MInisters headed by the Prime-Minister
Legislative branch bicameral Parliament: Council of States (245 members) and House of the People (545 members)
Judicial branch Supreme Court, High Courts, and trial courts
GDP per capita rank 145 (2013)

Corporate info

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Shelf companies permitted Legal system Incorporation timescale for a turnkey company Cyrillic alphabet permitted in company name Local registered office
Yes based on English common law 3-4 weeks No Yes
Types of entity Sole Proprietorship; Partnership; Limited Liability Partnership; Private Limited Company; Public Limited Company; Joint Venture Company; Liaison Office/Representative Office; Project Office; Branch of a foreign company
Incorporation timescale for a new company 12-15 days
Company suffix Private Limited
Sensitive words offensive or undesirable words in the opinion of Central Government; words giving the impression that the company is in any way connected with, or having the patronage of, the Central Government
Local registered agent Yes
Information to be kept at the registered office books of account, minutes of meetings, register of directors, register of shareholders, register of debenture-holders, register of any other security holders, register and index of beneficial owners
Seal required, type of seal yes, common seal
Redomiciliation (to, from) permitted not permitted

Director and secretary

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Minimum number of directors Residency requirements for directors Corporate directors permitted Disclosure to local agent Disclosure to public
2 Yes (at least one director should stay in India for 182 days during the previous calendar year) No Yes Yes
Directors’ meetings/frequency/location Yes/ 4 times a year/ anywhere
Company secretary required No
Residency requirements for a secretary No
Qualified secretary required No
Corporate secretary permitted No

Shareholder and beneficiary

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Minimum number of shareholders Residency requirements for shareholders Corporate shareholder permitted Disclosure to local agent Disclosure to public
2 No Yes Yes Yes
Meetings/frequency/location Yes / annually / at the city where the registered office is
Beneficiary info disclosure to No

Shares and share capital

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Minimum authorized share capital Minimum issued share capital Minimum paid share capital Authorized capital payment deadlines Bearer shares permitted
1000000 100000 100000 Within 30 days of registration No
Issued capital payment deadlines Within 30 days of registration
Standard currency INR
Standard authorized share capital 1000000
Standard par value of shares 10
Shares with no par value permitted No

Taxes

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Min. rate for corporate tax Capital gains tax VAT Withholding tax Exchange control
25,17% Regular rate 18% 20%/20%/10% Yes
Personal tax 5-30%
Corporate tax (in detail) At the base rate of 22%, the effective rate, taking into account the additional tax and levies on medicine and education, will be 25.17%.
VAT. Details Goods and Services Tax (GST) - similar to VAT. The tax is levied at the federal and state levels. Tax rates, as a rule, vary between 5% and 28%, the main rate is 18%
Other taxes Social Contributions, Securities Tax, Property Tax
Stamp duty уплачивается при сделках с имуществом

Accounts

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Requirement to file accounts Publicly accessible accounts Audit required Requirement to file Annual Return Publicly accessible Annual Return
Yes No Yes Yes Yes
Requirement to prepare accounts Yes
Double tax treaties network 98
Tax Exchange Information Agreement network 20
OECD member No
Offshore/onshore status according to the RF laws No

GENERAL INFORMATION

General info

The Republic of India is a country in South Asia. Bounded by the Indian Ocean on the south, the Arabian Sea on the south-west, and the Bay of Bengal on the south-east, it shares land borders with Pakistan to the west; China, Nepal, and Bhutan to the north-east; and Burma and Bangladesh to the east. In the Indian Ocean, India is in the vicinity of Sri Lanka and the Maldives; in addition, India's Andaman and Nicobar Islands share a maritime border with Thailand and Indonesia.
Total area of the country is 3,287,263 sq. km (ranks 7th in the world). The population is 1,220,800,359 people (2013, ranks 2nd in the world). The Indo-Aryan form the largest ethnic community - 72%, Dravidian - 25%, Mongoloid and other 3%.
The capital is New Delhi.
The official languages are Hindi and English.
The currency is Indian rupee (INR). 1 USD is equal to 62.46 INR.
Climate of India varies from tropical monsoon in the south to temperate in the north; in the coldest season (from December to February) average minimum temperature is +6-10°С, average maximum temperature is +21-23°С; in the hottest season (May-June) average minimum temperature is +26-28°С, average maximum temperature is about +40°С.
Time difference with Moscow is +1.5 hours.
Literacy rate is 64.8%.
Calling code is +91.

History

A number of independent states was formed in India by the 6th century B.C. Later there were founded the Indo-Greek, Indo-Skythians, Indo-Parthian Kingdoms, and Kushano-Sassanids Empire.
Alexander the Great’s conquest of India lasted from 327 to 325 years B.C. There were several dynasties in different times and different regions of India. The period of the Gupta Empire in the 3rd century is called the Golden Age.
India was under the Muslim rule in the 10th – 12th centuries. In the 16th century the European countries such as Portugal, Netherlands, France, and Great Britain started their colonization of Indian territories. Denmark, Austria, Sweden, and Prussia conquered just small territories.
The British supremacy was established in 1765. India gained its independence in 1947.
In three years it was proclaimed a Republic.

Government Type

India is a parliamentary republic and representative democracy with a bicameral parliament which is closely patterned on that of the Westminster System.
The head of state is the President of India who is elected indirectly by a national electoral college for a five-year term.
Executive power consists of the president, the vice-president, and the Council of Ministers—the cabinet being its executive committee—headed by the prime minister. The Prime Minister of India is the head of government and exercises most executive power. Appointed by the president, the prime minister is by convention supported by the party or political alliance holding the majority of seats in the lower house of parliament. Any minister holding a portfolio must be a member of one of the houses of parliament. In the Indian parliamentary system, the executive is subordinate to the legislature; the prime minister and his council are directly responsible to the lower house of the parliament.
Legislative power is formed by the bicameral Parliament which comprises the upper house called the Rajya Sabha ("Council of States") and the lower called the Lok Sabha ("House of the People"). The Rajya Sabha is a permanent body that has 245 members who serve in staggered six-year terms. Most are elected indirectly by the state and territorial legislatures in numbers proportional to their state's share of the national population. All but two of the Lok Sabha's 545 members are directly elected by popular vote; they represent individual constituencies via five-year terms. The remaining two members are nominated by the president from among the Anglo-Indian community, in case the president decides that they are not adequately represented.
Judiciary branch comprises the Supreme Court, headed by the Chief Justice of India, 24 High Courts, and a large number of trial courts.

Economy

The economy of India is the tenth-largest in the world by nominal GDP and the third-largest by purchasing power parity (PPP). The country is one of the G-20 major economies and a member of BRICS. On a per-capita-income basis, India ranked 145th by nominal GDP in 2013, according to the IMF. India's GDP grew by 9.3% in 2010–11; thus, the growth rate has nearly halved in just three years.
India is the 19th-largest exporter and the 10th-largest importer in the world. The main export items are textile, jewelry, engineering products, and software. The main import items are oil, machinery, fertilizers, and chemicals. The main trade partners of India are USA, EU, and China.
The independence-era Indian economy (from 1947 to 1991) was based on a mixed economy combining features of capitalism and socialism, resulting in an inward-looking, interventionist policies and import-substituting economy that failed to take advantage of the post-war expansion of trade. This model contributed to widespread inefficiencies and corruption, and the failings of this system were due largely to its poor implementation. In 1991, India adopted liberal and free-market principles and liberalised its economy to international trade. Following these major economic reforms, and a strong focus on developing national infrastructure, the country's economic growth progressed at a rapid pace, with relatively large increases in per-capita incomes. However, the fourth part of the population still lives under poverty line.

CORPORATE INFORMATION

Legal system

The legal system of India is based on English common law.
The main source of law is Constitution 1950 which is the largest constitution in the world.
Companies in India are governed by Companies Act 1956.

Types of entity

The principal forms of business organization in India are:
  • Sole Proprietorship
  • Partnership
  • Limited Liability Partnership
  • Private Limited Company
  • Public Limited Company
  • Joint Venture Company
  • Liaison Office/Representative Office
  • Project Office
  • Branch of a foreign company

The most common structure is the private limited liability company. Shelf companies of this type are available.

REGISTRATION

Company name

There is a range of requirements to the company name in India:
  1. the name of the company should only be in English;
  2. should end “Private Limited” in the case of a private limited company;
  3. shall not be identical with or resemble too nearly to the name of an existing company;
  4. shall not constitute an offence under any law for the time being in force;
  5. shall not be undesirable in the opinion of the Central Government;
  6. shall not contain any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government under any law for the time being in force unless the previous approval of the Central Government has been obtained for the use of any such word or expression.

Registration

The following steps are required to incorporate a Private Limited company in India:
  1. Obtain director identification number (DIN) online – 1 day : submit e-Form DIN-1 along with photograph and scanned copy of supporting documents i.e. proof of identity, and proof of residence as per the guidelines. Along with the supporting documents, the applicant has to attach a document (Affidavit) which contains the applicant's name, middle name, date of birth, text as specified and the physical signature of the applicant. The Affidavit should be duly notarized. The e-Form has to be digitally signed and uploaded on MCA21 portal after which the fees (100 INR) for the same is paid.
  2. Obtain digital signature certificate online – 1 day : to use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate. The digital signature certificate can be obtained from one of six private agencies authorized by MCA 21 such as Tata Consultancy Services, NIC, E-Mudhra, MTNL Trust line. Each agency has its own fee structure, ranging from INR 400 to INR 2650. The details of these Certification Agencies are available on the portal of the Ministry of Corporate Affairs (www.mca.gov.in).
  3. Reserve the company name with the Registrar of Companies (ROC) online – 3 days : check availability of the proposed name by checking on the MCA21 portal for other companies or LLPs having similar names; prepare the application in eForm 1A with all relevant details and declarations; upload the eForm 1A to the MCA 21 portal and pay fees of Rs. 1000 electronically (net banking or credit card). The name, if made available to the applicant, will be reserved for the applicant to use for 60 days from the date of approval. If the proposed company is not incorporated during this 60 day period, the approval will lapse and the name will be available to other applicants.
  4. Pay stamp duties online, file all incorporation forms and documents online and obtain the certificate of incorporation – 3-7 days: for registration, the following forms are required to be electronically filed on the website of the Ministry of Company Affairs: e-form 1; e-form 18; e-form 32. Along with these documents, scanned copies of the signed and the Memorandum and Articles of Association, must be attached to Form 1. Proof of location Registered Office in the Form of Lease Deed or NOC from the Owner must be attached to Form 18. The 3 forms as well as the memorandum and articles of association must be certified by a practicing professional regarding the correctness of the information/declarations. The fees for registering a company can be paid online using a credit card or by payment in cash at certain authorized banks. The certificate of incorporation is immediately issued by the Registrar of Companies, signed digitally and sent via email to the Company. The registration fees paid to the Registrar are scaled according to the company’s authorized capital (as stated in its memorandum): e.g. INR 100,000 or less: INR 4,000. If the nominal share capital is over INR 100,000, additional fees based on the amount of nominal capital apply to the base registration fee of INR 4,000. Registrar filing fees for the articles and for the other forms (l, 18, and 32): INR 200 for a company with authorized share capital of more than INR 100,000 but less than INR 500,000.
  5. Make a seal – 1 day: although making a seal is not a legal requirement for the company to be incorporated, companies require a company seal to issue share certificates and other documents.
  6. Obtain a Permanent Account Number (PAN) – 7 days: the PAN is a 10-digit alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. Visit an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) Investors Services Ltd to obtain PAN. The application for PAN can also be made online but the documents still need to be physically dropped off for verification with the authorized agent. For more details (www.incometaxindia.gov.in , www.utiisl.co.in , www.tin-nsdl.com)
  7. Obtain a tax account number for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department - 7 days, simultaneous with previous procedure: the tax deduction and collection account number (TAN) is a 10-digit alphanumeric number required by all persons responsible for deducting or collecting tax. Failure to apply for a TAN or to comply with any of the other provisions of the section is subject to a penalty of INR 10,000/- . The application for allotment of a TAN must be submitted at any TIN Facilitation Center authorized to receive e-TDS returns. Locations of TIN Facilitation Centers are at www.incometaxindia.gov.in and tin.nsdl.com. The processing fee for application is INR 55 (plus applicable taxes - currently at 12.36%). The application for TAN can be made either online TAN can be through the NSDL website www.tin-nsdl.com or offline. However, after the payment of the fee by credit card, the hard copy of the application must be physically filed with NSDL.
  8. Register with Office of Inspector – 2 days, simultaneous with previous procedure: a statement containing the employer’s and manager’s name and the establishment’s name (if any), postal address, and category must be sent to the local shop inspector with the applicable fees. The employer must register the establishment in the prescribed manner within 30 days of the date on which the establishment commences its work.
  9. Register for VAT online - 10 days, simultaneous with previous procedure: application for registration of VAT by the founders who are required to obtain registration or those who voluntarily desire to get registration can be filed electronically on the website www.mahavat.gov.in. After the completed application form is submitted online, registration certificate will be printed and issued to the company on the appointed date. Usually, the appointment date is scheduled in the next 10 days.
  10. Register for profession tax – 2 days, simultaneous with previous procedure: all applications for registration (i.e. for obtaining a Profession Tax Registration Certificate) are required to be made online, on the website of www.mahavat.gov.in, in 'Form I'. Every employer (not being an officer of the government) is liable to pay tax and shall obtain a certificate of registration from the prescribed authority. Depending on the nature of the business, the application should be supported with such documents as address proof, details of company registration number under Indian Companies Act (1956), details of head office (if the company is a branch of company registered outside the state), company deed, certificates under any other act, and so forth.
  11. Register with Employees' Provident Fund Organization – 12 days, simultaneous with previous procedure: the Provident Fund registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. Provident Fund registration is optional if workforce size is not more than 20. All employers must register online with the EPFO online portal in order to generate challans for making any remittances (www.epfindia.gov.in).
  12. Register for medical insurance (ESIC) – 9 days, simultaneous with previous procedure: registration is the process by which every employer/factory and every employee employed for wages are identified for the purpose of the medical insurance scheme and their individual records are set up for them. As per the Employees' State Insurance (General), Form 01 is the form required to be submitted by Employer for registration. It takes 3 days to a week for the Employer Code Number to be issued. In order to insure that all the insured persons receive their identity cards to enable them to receive cash and medical benefit, the identity cards will be delivered to the insured persons directly by the ESI Corporation rather than through the employers. Employers can now submit application online for registration on the ESIC website (www.esic.in).

The formation of a new company in India takes about 3 weeks.

Local registered office

Each company in India shall, on and from the fifteenth day of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it. The company shall furnish to the Registrar verification of its registered office within a period of thirty days of its incorporation in such manner as may be prescribed.
Every company shall paint or affix its name, and the address of its registered office, and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages.
Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within fifteen days of the change, who shall record the same.
If any default is made in complying with these requirements, the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees.
It is required to keep books of account, minutes of meetings, register of directors, register of shareholders, register of debenture-holders, register of any other security holders, register and index of beneficial owners at the registered office. However, a company may, if so authorised by its articles, keep in any country outside India, in such manner as may be prescribed, a part of the register, called “foreign register” containing the names and particulars of the members, debenture- holders, other security holders or beneficial owners residing outside India.
If a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the law, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day, after the first during which the failure continues.

Seal

There are statutory requirements for a company in India to have a seal known as a common seal. Companies require a common seal to issue share certificates and other documents.

Redomicile

The redomiciliation of companies to or from India is not permitted.

COMPANY STRUCTURE

Directors

Every company in India must have a Board of Directors consisting of individuals as directors and shall have a minimum number of two directors in the case of a private company, and a maximum of fifteen directors. Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.
Every individual intending to be appointed as director of a company shall make an application for allotment of Director Identification Number to the Central Government in such form and manner and along with such fees as may be prescribed. No individual, who has already been allotted a Director Identification Number, shall apply for, obtain or possess another Director Identification Number.
No person shall hold office as a director, including any alternate directorship, in more than twenty companies at the same time.
Name of directors and their identification numbers given by the government are in public domain.
Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board. The participation of directors in a meeting of the Board may be either in person or through video conferencing or other audio visual means, as may be prescribed, which are capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meetings along with date and time. Directors’ meetings can be held anywhere in the world.

Secretary

According to Indian legislation, in case of companies having paid-up capital of INR 50 million or above required fulltime company secretary which should be a qualified secretary. Other Indian companies are not required to appoint a company secretary.

Shareholders

Each company in India must have at least two shareholders. There is no restriction on the nationality or residency of the shareholders. The shareholders can be individuals and/or legal persons.
Shareholders information is disclosed on a yearly basis.
The Annual General Meeting (AGM) of a Company is required to be held once in every calendar year and not more than 15 months shall elapse between the date of one AGM and that of the next. This meeting can be held only in the same city or town, where the registered office is situated.

Beneficiary

The details of the beneficial owner are not available on public record. The information is only required to be disclosed with the banker at the time of opening a bank account.

Share capital and shares

Minimum authorized capital in India is set at INR 100,000. However, in case of use of specific words in a company name (e.g. International, Business, India, Manufacturing) the minimum can go up.
Minimum capital should be paid up within 30 days of registration of the company.
Standard par value of shares is generally INR 10 per share.
Bearer shares and shares with no par value are prohibited.

TAXATION

Personal income tax

Taxation of individuals depends on their status:
  • tax residents ordinarily resident in the country pay tax on their worldwide income
  • tax residents not ordinarily resident in the country pay tax on income arising in India and foreign income received in India
  • tax non-residents pay tax on income from sources in India.

Income tax is levied at the following rates:
  • Income up to INR 250,000 – 0%
  • Income from INR 250,000 to 500,000 – 5%
  • Income from INR 500,000 to 1,000,000 – 20%
  • Income over INR 1,000,000 – 30%.

Taxpayers may choose to be taxed on a different scale (losing certain tax deductions in this case):
  • Income up to INR 250,000 – 0%
  • Income from INR 250,000 to 500,000 – 5%
  • Income from INR 500,000 to 750,000 – 10%
  • Income from INR 750,000 to 1,000,000 – 15%
  • Income from INR 1,000,000 to 1,250,000 – 20%
  • Income from INR 1,250,000 to 1,500,000 – 25%
  • Income over INR 1,500,000 – 30%.

A surcharge is levied on taxpayers whose income exceeds INR 5 million:
  • Income from INR 5 million to 10 million – 10%
  • Income from INR 10 million to 20 million – 15%
  • Income from INR 20 million to 50 million – 25%
  • Income over INR 50 million – 37%.

The amount of tax and surcharge are subject to health and education cess at the rate of 4%.
Residents with income up to INR 500,000 can receive a tax rebate or INR 12,000 if the tax exceeds this amount.
An alternative minimum tax applies to persons doing business.
Dividends are included in the taxable income.
Gains from the disposal of assets held for up to 36 months (12 months for Indian listed securities, 24 months for real estate and unlisted shares) are included in the taxable income taxed generally at the ordinary rates.
Gains from the disposal of assets held longer than specified above are calculated according to special rules and are taxed at reduced rates.

Corporate income tax

Indian companies pay corporate income tax on their worldwide income, while foreign companies pay tax on income sourced in India.
The basic corporate income tax rate for Indian companies is 22% unless they use special incentives, for newly created industrial companies – 15%. A 10% surcharge is payable on the amount of corporate income tax.
For the rest of Indian companies, the tax rate is 30% and the surcharge rate is 7% or 12% if the total turnover exceeds certain thresholds.
The basic tax rate for foreign companies is 40%, the surcharge rate is 2% or 5% if the total turnover exceeds certain thresholds. The basic corporate income tax and surcharges are subject to health and education cess at the rate of 4%.
In the case of basic rate of 22%, the effective rate, including the surcharge and health and education cess, will be 25.17%.
There is a minimum alternative tax rate levied at 15% of the book profits.
Gains from the disposal of assets held short-term are generally taxed at the ordinary tax rates.
There are exceptions, such as gains from the disposal of listed shares which are taxed at 15% (plus health and education cess).
Gains from the disposal of assets held for more than 36 months (12 months for listed securities, 24 months for unlisted shares) are eligible for special reduced rates and indexation of costs.
Dividends received are taxed at general tax rates. To eliminate multiple taxation, in general, it is allowed to deduct distributed dividends from received ones.

CFC rules

India has not yet introduced CFC rules.

Withholding tax

Dividend payments are subject to withholding tax at the rate of 20%, interest payments, in general, at the rate of 20% (reducible to 5% in many cases), and royalties – at the rate of 10%.
The tax rates are reduced under double tax treaties (DTT).

Goods and services tax (GST)

GST is similar to VAT. The tax is levied at the federal level and at the level of states.
The tax rates normally range between 5% and 28%, with a general rate of 18%.

Social security contributions

Payment of social security contributions is mandatory for companies with at least 20 employees. Contributions can also be paid on a voluntary basis.
Employees are required to pay contributions, usually at the rate of 12%.
Employers also pay a contribution at the rate of 12% when the employee’s salary is not more than INR 15,000 per month (the restriction does not apply to foreign workers).
There are mandatory health insurance contributions for businesses, generally for those with at least 10 employees. The contribution is payable when the employee’s salary is not more than INR 21,000 per month at the rate of 1.75% by employees and at the rate of 4.75% by employers.
In general, social security covers a small part of the population.

Stamp duty

Stamp duty is payable on property transactions.
The rates are generally set at the level of a state.

Securities transaction tax

The tax applies to transactions involving listed shares and certain other financial instruments.
The rates range from 0.001% to 0.125%.

Property tax

The tax rates depend on the location of the property and are set by local authorities.

Double tax agreements

India signed tax agreements with 119 jurisdictions:
99 DTCs: Afghanistan, Albania, Armenia, Australia, Austria, Bangladesh, Belarus, Belgium, Bhutan, Botswana, Brazil, Bulgaria, Canada, China, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Faroe Islands, Fiji, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kuwait, Kyrgyzstan, Latvia, Libya, Lithuania, Luxembourg, Macedonia, Malaysia, Maldives, Malta, Mauritius, Mexico, Mongolia, Montenegro, Morocco, Mozambique, Myanmar, Namibia, Nepal, Netherlands, New Zealand, Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Taipei, Tajikistan, Tanzania, Thailand, Trinidad and Tobago, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uruguay, Uzbekistan, Vietnam, Zambia.
20 TIEAs: Argentina, Bahamas, Bahrain, Belize, Bermuda, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Macao (China), Maldives, Marshall Islands, Monaco, Saint Kitts and Nevis, San Marino, Seychelles, Virgin Islands (British).

Exchange control

India has special rules for and certain restrictions on foreign exchange transactions.

ACCOUNTS

Accounting records

Every company shall prepare and keep at its registered office books of account. All or any of the books of account may be kept at other place in India as the Board of Directors may decide and where such a decision is taken, the company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address of that other place. The company may keep such books of account or other relevant papers in electronic mode.
Books of account should be kept according to the standards issued by the Institute of Chartered Accountants of India which are largely based on IAS. The books shall maintain records of the following:
  • all sums of money received and expended and the matters in respect of which the receipt and expenditure take place;
  • all sales and purchases of goods by the company;
  • the assets and liabilities of the company;
  • in case of companies engaged in manufacturing, processing, mining etc, such particulars relating to utilization of material or labor or other items of cost.

The books of account relating to eight years immediately preceding the current year together with supporting vouchers are required to be preserved in good order.
In case of violation of the above, the responsible person shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both.

Financial statements

All Indian companies must prepare financial statements annually. The first annual accounts of a newly incorporated company should be drawn from the date of its incorporation up to the day not preceding the AGM date by more than 9 months. Thereafter Annual Accounts for the period ending with the day, not preceding the AGM by more than 6 months, have to be placed in the said AGM.
Companies are required to file the Annual Accounts with the Office of the concerned Registrar of Companies within 30 days from their AGM or where the AGM is not held, then within 30 days of the last date on which the AGM was required to be held.
The accounts of the company must relate to a financial year (comprising of 12 months) but must not exceed 15 months. The company can obtain prior permission from the ROC for an extension of the accounting period to the extent of 18 months.
In case of a Private limited company balance sheet is publicly accessible, but statement of profit and losses is not.

Audit

The auditors’ report shall be attached to every financial statement.
At each AGM, every company must appoint auditor or auditors who should be chartered accountants. Such auditors are to hold office from the conclusion of that meeting until the conclusion of the next AGM.
Every auditor of a company shall have a right of access at all times to the books and accounts and vouchers of the company.

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.


Every Indian company having a share capital is required to file an annual return with the ROC within 60 days from the date on which the AGM of the company was held or where the AGM is not held, then within 60 days of the last date on which the AGM was required to be held. The return is to be duly signed digitally and the requisite certificates to be attached.
The annual return should contain the following particulars:
  • registered office, principal business activities, particulars of company's holding, subsidiary and associate companies;
  • shares, debentures and other securities and shareholding pattern;
  • indebtedness;
  • members and debenture-holders along with changes therein since the close of the previous financial year;
  • promoters, directors, key managerial personnel along with changes therein since the close of the previous financial year;
  • meetings of members or a class thereof, Board and its various committees along with attendance details;
  • remuneration of directors and key managerial personnel;
  • penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment;
  • matters relating to certification of compliances, disclosures as may be prescribed;
  • details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by them; and
  • such other matters as may be prescribed, and signed by a director and the company secretary.

Companies with a Paid-up capital between INR 1million and INR 20 Million are required to file an annual compliance Certificate from a Company Secretary in whole time within 30 days from the date of annual general meeting, along with the Annual Report.
If a company fails to file its annual return before the expiry of the period, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakhs rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.
Annual return is publicly accessible.

Tax returns

Tax returns

The tax year runs from 1 April to 31 March.
The tax return is filed by 31 October of the following year.
During the year, quarterly advance tax payments are made. The final payment is due by the tax return filing deadline.

International law relations

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Party to the Hague Convention (Apostille) Legal system Double tax treaties network OECD member Offshore/onshore status according to the RF laws
Yes based on English common law 98 No No

Public authorities and legal acts

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List of laws and regulations
Act name Scope of law
Companies Act companies
Limited Liability Partnership Act limited liability partnership
Partnership Act partnership
Chartered Accountants Act chartered accountants
Company Secretaries Act company secretaries
Competition Act competition
Bombay Shops and Establishments Act shops and establishments
Maharashtra Shops and Establishments Rules shops and establishments
Income Tax Act income tax
Wealth Tax Act wealth tax
Finance Act taxation
Tax treaties entered Afghanistan, Albania, Armenia, Australia, Austria, Bangladesh, Belarus, Belgium, Bhutan, Botswana, Brazil, Bulgaria, Canada, China, Chinese Taipei, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Faroe Islands, Fiji, Finland, Former Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kuwait, Kyrgyzstan, Latvia, Libya, Lithuania, Luxembourg, Malaysia, Maldives, Malta, Mauritius, Mexico, Mongolia, Montenegro, Morocco, Mozambique, Myanmar, Namibia, Nepal, Netherlands, New Zealand, Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syrian Arab Republic, Tajikistan, Tanzania, Thailand, Trinidad and Tobago, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Uzbekistan, Viet nam, Zambia
Tax Exchange Information Agreement (TEIA) Argentina, Bahamas, Bahrain, Belize, Bermuda, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Macao (China), Maldives, Marshall Islands, Monaco, Saint Kitts and Nevis, San Marino, Seychelles, Virgin Islands (British)
List of state regulatory authorities
Ministry of External Affairs http://www.mea.gov.in
Ministry of Corporate Affairs http://www.mca.gov.in
Company Law Board http://www.clb.nic.in
Competition Comission of India http://www.cci.gov.in
Indian Institute of Corporate Affairs http://www.iica.in
National Foundation for Coporate Governance http://www.nfcg.in/
Institute of Chartered Accountants http://www.icai.org
Insitute of Company Secretaries http://www.icsi.edu
Income Tax Department http://www.incometaxindia.gov.in/Pages/default.aspx
Authority for Advance Rulings http://www.aarrulings.in
Business Knowledge Resource https://archive.india.gov.in/business/
Bank of India http://www.bankofindia.com/english/Home.aspx

    Legal Partner of Review:

    Mukesh Raj & Co.

    Advisor to Global SME

    Mukesh Raj & Co.

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