Taxes and Accounting in India

Overview by

Accounting Rules

Tax Year
The fiscal year begins on 1st of April and ends on the 31st of March of the next year.
Accounting Standards
Indian Accounting Standards (IAS) are based on the statements issued by the Institute Of Chartered Accountants of India (ICAI).
Accounting Regulation Bodies
Institute of Chartered Accounts of India
Accounting Reports
'Balance Sheet' and 'Profit & Loss' report.
Publication Requirements
The "balance sheet" and ‘profit and loss account' need to be published every fiscal year.
Professional Accountancy Bodies
ICAI , Institute of Chartered Accounts of India
Certification and Auditing
Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. For more information, consult the Auditors Association of Southern India and The Institute of Cost and Works Accountants of India (ICWAI)
Accounting News
Accounting news in India
India accounting news

Return to top

Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) and Sale taxes, depending on the State. For more details, consult the business portal of India. A nationwide Goods and Services Tax (GST) whose rate will be around 14-16% is expected to be launched in April 2012.
Tax Rate
Reduced Tax Rate
The lower rates are 4% (agriculture and industrial inputs) and 1% (gold and silver ornaments).
Other Consumption Taxes
Service Tax (12%) applies to more than 100 services. For details visit the web site: Service Tax.
Excise Duty: 8% (on drugs, pharmaceuticals, cans, paper, Water filtration and purification devices, etc), 12% (small cars, packaged software), 14% (cement) and 24%.
For further information consult the Central Board of excise and Customs.
Find Tax Professionals in India on

Return to top

Corporate Taxes

Company Tax
30% for domestic companies and 40% for foreign companies and branches of foreign companies.
Tax Rate For Foreign Companies
Resident companies are subject to tax on gross worldwide income while non-resident companies are taxed only on Indian-source income.
Capital Gains Taxation
Long-term capital gains : 20% flat with indexation or 10% flat without indexation.
Short-term capital gains: 10%.
Gains from the sale of long-term capital assets are exempt from capital gains tax if they are reinvested in certain securities within six months and locked in for three years.
Main Allowable Deductions and Tax Credit
Specific deductions are allowed:


- A 100% deduction for interest payments on borrowed capital,
- Capital expenditure on research conducted in-house and for payments made for scientific research to specified organizations,
- Interest, royalties and fees paid outside of India to overseas affiliates or in India to a non-resident provided tax as required is withheld,
- Payments to employees under voluntary retirement schemes may be deducted over five years,
- Business losses (conditions apply).

Indian tax law does not permit companies to take a deduction for a general bad-debt reserve, although specific bad debts may be deducted when written off. For additional information, consult the Deloitte Tax Guide.

Other Corporate Taxes
A minimum alternative tax (MAT) is also imposed on corporations. If a company's tax liability is less than 10% of book profits, the book profits are deemed to be total income and are charged to tax at 10%, plus the applicable surcharge and cess.
A ‘fringe benefits tax' of 30% is imposed on the value of fringe benefits that companies provide or are deemed to provide to their employees.

Return to top

Individual Taxes

Tax Rate

Taxation Income (INR) Progressive Tax Rate up to 30%
Less than 160,000 0%
160,001 – 500,000 10%
500,001 – 800,000 INR 4,000 plus 20% of the amount exceeding INR 150,000
800,001 and above INR 24,000 plus 30% of the amount exceeding INR 250,000
Allowable Deductions and Tax Credit
Deductions are allowed for contributions to life insurance, recognized provident funds, national savings certificates, the national savings scheme, income from certain mutual funds and dividends, and some educational expenses up to an overall ceiling of INR 100,000.
Special Expatriate Tax Regime
There are no special exemptions or deductions available to foreign nationals working in India, except for local living allowances, which are exempt to the extent expense is actually incurred.

Return to top

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Treaties signed with countries for avoidation of double taxation.
Withholding Taxes
Dividends: 0%, Interest: 20%, Royalties:10%

Return to top

Find more on about Taxes and Accounting in India.

Intellectual Property

National Organizations
Controller-General of Patents, Designs and Trademarks
Copyright Office
Protection of Plant Varieties and Farmers' Rights Authority
Department of Information Technology
National Intellectual Property Organization (NIPO)
Regional Organizations
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National Regulation and International Agreements

Type of property and law Validity International Agreements Signed


Patents Act, 1970

20 years
Patent Cooperation Treaty (PCT)
Strasbourg agreement Concerning the International Patent Classification
Trade Marks Act, 1999
10 years, renewable every 10 years with a grace period of 6 months for renewal. Trademark law treaty
Nice agreement
Protocol relating to the Madrid Agreement

Designs Act, 2000

10 years, renewable for another 5 years.  

Copyright Act, 1957

60 years, varies for different works.

Berne convention
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
Semi-Conductor Integrated Circuits Layout-Design Act,2000
10 years, non-renewable.  

Return to top

Legal Framework

Independence of Justice
Judiciary is largely independent in India. But, the courts are severely backlogged and understaffed which results in the detention of a large number of persons who are awaiting trial. India accepts compulsory ICJ jurisdiction, with reservations.
Equal Treatment of Nationals and Foreigners
Though India is ruled by law and in the texts justice ensures non-discriminatory treatment of all cases. However in practice, fair trial to foreign nationals from the country's judicial system cannot be always guaranteed.
The Language of Justice
Recourse to an Interpreter
Interpreters in other foreign languages are easily available.
Sources of the Law and Legal Similarities
The Constitution of India – 1950


The country also has separate personal law codes for Muslims, Christians, and Hindus.

Checking National Laws Online
Legislation India
Laws for India
India Laws
Find Legal Experts in India on

Return to top


National Standards Organizations
Bureau of Indian Standards(BIS) - Earlier called as Indian Standards Institute (ISI)
Integration in the International Standards Network
The BIS is a founder member of the International Standard organization (ISO) and of the International Electrotechnical Commission (IEC)


For more details consult

Classification of Standards
The symbol of the standard is ISI. Every ISI mark has a fixed format that carries the Indian Standard number on top of the mark based on the type of product.
Online Consultation of Standards
Bureau of Indian Standards (BIS)
Certification Organizations
Quality Council of India

Return to top

Business Practices

General Information
Official web site of India
BuyUSA Information Guide
The Executive Planet
Doing Business
Opening Hours and Days
Shops are closed on Sunday. Governement office are closed on Saturday and Sunday. Banks close in the afternoon (from 14 in the week, from 12 on Saturday).

Public Holidays

New Year's Day 1st January
Idu'z Zuha / Bakrid (Muslim festival) Dec/Jan, changes according to the year.
Republic Day 26th January
Mahashivratri (Hindu festival) Feb/March, changes according to the year.
Mahavir Jayanthi (Hindu festival) Feb/March, changes according to the year.
Holi (Festival of Colors) and Phagwah ? Hindu Festival March, changes according to the year.
Milad-Un-Nabi (Birth of the Prophet Mohammed) April/May, changes according to the year.
Good Friday April, changes according to the year.
Buddha Purnima (Hindu festival) May, changes according to the year.
Independence Day 15th August
Janmashtami (Birthday of Lord Krishna of Hindus) Sep, changes according to the year.
Mahatma Gandhi's Birthday 2nd October
Id ul Fitr (End of Ramadan) Oct, changes according to the year
Dussehra (Vijaya Dashami, a Hindu Festival) Oct, changes according to the year
Deepavali or Diwali (Festival of Lights, a Hindu Festival) Nov, changes according to the year
Guru Nanak's Birthday (A Sikh festival) Nov, changes according to the year
Christmas Day 25th Dec
Note: Only the secular holidays of Republic Day, Independence Day and Mahatma Gandhi's Birthday are universally observed. Other public holidays in India tend to be observed on a strictly regional basis.

Periods When Companies Usually Close

Deepavali 2-3 days, Deepavali generally falls in the month of November
New Year 1-2 days on 31st Dec and 1st Jan

Return to top

Any Comments About This Content? Report It to Us.

Read more See less
Experts Views (1)
Latest News (1) Go Top
Post your content


Post content about Taxes and Accounting in India and you will be listed here to receive requests for offers.

Contact our expert contributors