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1 TAXATION IN INDIA. 2 Overview 1- The provisions of Indian Income-Tax are governed by Indian Income-Tax Act, 1961 which extends to the whole of India.

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Presentation on theme: "1 TAXATION IN INDIA. 2 Overview 1- The provisions of Indian Income-Tax are governed by Indian Income-Tax Act, 1961 which extends to the whole of India."— Presentation transcript:

1 1 TAXATION IN INDIA

2 2 Overview 1- The provisions of Indian Income-Tax are governed by Indian Income-Tax Act, 1961 which extends to the whole of India and became effective from 1 st April Every year a Budget is presented before the Parliament by the Finance Minister. One of the most important components of the Budget is the Finance Bill, which contains various amendments which are sought to be made in the area of Direct Taxes levied by the Central Government.

3 3 Managerial services, Technical services and Consultancy services including services of other personnel. 4- No approval is required from Reserve Bank of India (RBI) which is Central Bank of the country for technical fee payment up to USD 1 million per project. Payment above USD 1 million is subject to approval from RBI. 5- Fee for Technical services is deductible expense in the books of accounts of Indian entity and reduces the tax liability of Indian entity legally.

4 4 P PP Permanent Account Number (PAN) 1- A new provision relating to Tax Deduction at Source (TDS) under the Income Tax Act 1961 became applicable with effect from 1st April Tax at higher of the prescribed rate or 20% will be deducted on all transaction liable to TDS, where the Permanent Account Number (PAN) of the deductee is not available. The Law will also apply to all non-residents in respect of payments / remittances liable to TDS. 2- PAN is Tax Id under Indian Income Tax Act and as per new amendment even foreign companies intending to receive payments taxable under Indian Income Tax Act are required to quote Indian PAN. However following payments are not subject to withholding tax and therefore foreign companies are not require to quote PAN.

5 5 Books of Accounts 1- Every Indian company including Branch office and Liaison office are required to maintain books of accounts so as to compute profit/loss derived from operations in India. Further such books of accounts are also required to ascertain creditors/debtors and other business transactions effected in India. 2- Such books of accounts have to be maintained at principal place of business carried out by the company. 3- Such books of accounts have to be maintained for a period of 6 years from end of the financial year. 4- It is a statutory requirement to maintain above books as per section 44AA of Indian Income-Tax Act 1961.


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