India

1.1 What is the basic corporate tax rate and are there any other specific rates that should be noted? 

Rates of income tax

Corporate taxation in India is currently governed by the Income‑tax Act, 2025 (ITA 2025) which contains the substantive charging provisions as well as the procedural framework for assessment, reassessment, enforcement, dispute resolution and appeals. The ITA 2025 is supplemented by the Income‑tax Rules, 2026, along with circulars, notifications and administrative instructions issued by the Central Board of Direct Taxes (CBDT), which play an important interpretative and administrative role.

The ITA 2025, which came into force with effect from 1 April 2026 (tax year 2026–27 onwards), replaces the erstwhile Income‑tax Act, 1961 (ITA 1961). The new legislation largely retains the existing policy architecture governing tax administration and dispute resolution, while reorganising, simplifying and modernising provisions to improve clarity, reduce interpretational ambiguity and streamline compliance.

Individual taxation (old tax regime) 

Below are the rates for individuals (other than senior citizens), Hindu Undivided Family (HUF), association of persons (AOP), or body of individuals (BOI), whether incorporated or not, or every artificial juridical person.

New tax regime (applicable for tax year 2026–27) 

Tax rates of companies

In the case of a domestic company, the rate of tax levied will be levied at 30% of the gross turnover, and in the case of a company other than a domestic company, the rate of tax will be levied at 35%, on income other than income chargeable at special rates. There are also special provisions contained in the law permitting domestic companies to take advantage of a lower rate of taxes subject to fulfilment of certain conditions.

India does not currently have a global minimum tax in force. While India is a member of the OECD/G20 Inclusive Framework and supports the objectives of Pillar Two, it has not yet enacted domestic legislation implementing the global minimum tax rules, such as the Income Inclusion Rule (IIR), Undertaxed Profits Rule (UTPR) or a Qualified Domestic Minimum Top‑Up Tax (QDMTT). India is, however, closely examining the implementation of Pillar Two, including the treaty‑based Subject to Tax Rule (STTR), which would allow source‑based taxation of certain payments where such income is subject to low tax in the recipient jurisdiction.

Taxation of income

In India, income is taxed primarily based on the residential status of the taxpayer and the nature of income. Income is classified under various banners, namely income from a business or profession, salaries, house property, capital gains and other sources.

• Resident taxpayers are generally taxed on their global income, subject to specific exemptions and reliefs.
• Non‑resident taxpayers are taxed only on income that accrues, arises or is deemed to accrue or arise in India.

Capital gains

Capital gains arise on the transfer of a capital asset and are taxed separately based on the period of holding and nature of the asset. Capital gains are broadly categorised into short‑term and long‑term capital gains, with differing tax treatment depending on whether the asset is immovable property, listed securities, unlisted shares or other specified assets.

Taxation of foreign‑source income

The taxation of foreign-source income in India depends significantly on the taxpayer’s residential status:

• Residents are taxable on their worldwide income, including income earned outside India, subject to foreign tax credit relief.
• Non-residents and resident but not ordinarily resident (RNOR) taxpayers are taxed primarily on income sourced in India, with limited exposure to foreign-source income.

India has an extensive network of Double Taxation Avoidance Agreements (DTAAs), which may provide relief by way of exemption or credit and govern the allocation of taxing rights between India and the source country. Foreign tax credits are generally allowed in India for taxes paid overseas, subject to prescribed conditions and procedural requirements like the filing of forms and returns in India to claim such reliefs.

India has a comprehensive indirect tax regime, primarily centred on the Goods and Services Tax (GST).

GST is a destination‑based, value‑added tax levied on the supply of goods and services across India. It has replaced multiple erstwhile indirect taxes such as VAT, excise duty and service tax, and is structured into:

• Central GST (CGST) and State GST (SGST) for intrastate supplies; and
• Integrated GST (IGST) for interstate and cross‑border supplies.

In addition to GST, certain indirect taxes continue to apply outside the GST framework, including:

• customs duties on imports (and limited exports);
• stamp duty on specified instruments and transactions; and
• state‑specific levies on items excluded from GST, such as petroleum products, alcohol for human consumption and electricity (subject to future inclusion).

GST is administered through a dual federal structure and allows input tax credit across the supply chain, subject to prescribed conditions.

India follows a comprehensive withholding tax (TDS) regime under which tax must be deducted by the payer at the time of credit or payment of specified sums.

• Payments to residents. TDS applies to specified payments such as salaries, interest, royalties, professional fees, contractual payments and rent, at rates prescribed under domestic law.
• Payments to non‑residents. TDS applies to income deemed to accrue or arise in India, including interest, royalties and fees for technical services, subject to domestic law or applicable tax treaty relief.

Where applicable, DTAAs may provide reduced rates or exemptions, subject to conditions such as furnishing a valid tax residency certificate. Tax deducted is credited against the recipient’s final tax liability, and non‑compliance may trigger interest, penalties and disallowance of expenditure.

The General Anti-Avoidance Rule (GAAR) is contained in Chapter XI of the of the ITA 2025 (Chapter X-A, ITA 1961) and has been in force since 1 April 2017. It empowers tax authorities to deny tax benefits arising from impermissible avoidance arrangements where the main purpose is to obtain a tax benefit and the arrangement lacks commercial substance or results in misuse or abuse of tax provisions.

By virtue of section 159(6) of the ITA 2025 (pari materia to section 90(2A), ITA 1961), treaty benefits under a DTAA do not prevail over GAAR where GAAR is invoked. However, the Central Board of Direct Taxes has clarified that GAAR will generally not be invoked where treaty abuse is adequately addressed by a limitation of benefits (LOB) clause.

GAAR operates alongside treaty‑based anti‑abuse rules such as the Principal Purpose Test (PPT) introduced through the multilateral instrument, with grandfathering for arrangements entered into prior to 1 April 2017.

In India, tax controversies are greater with respect to corporate tax issues and these are largely centred on the following:

• transfer pricing issues and application of tax treaties;
• eligibility of tax exemptions and deductions;
• taxation of foreign income in India;
• tax issues that arise in a business reorganisation;
• application of withholding tax provisions especially in an international context; and
• procedural and reporting violations which include non-filing of requisite forms under law or non-reporting of certain transactions or information as required under law.

Understanding the legal framework and existing jurisprudence becomes crucial for taxpayers in structuring transactions and consequently framing their self-assessment for tax purposes.

Apart from corporate tax issues, significant controversies also arise in individual taxation, specifically with respect to high-net-worth individuals who often face investigations with an aim to unearth unreported incomes or aggressive tax planning strategies that may not meet the test of commercial substance.

Assessment, reassessment and enforcement regime

Both under the ITA 1961 and the ITA 2025, tax controversies typically arise during scrutiny assessments, reassessments or search and seizure proceedings. The legislation prescribes limitation periods for initiation and completion of these proceedings, creating statutory checks on reopening of concluded assessments.

Assessment. The timeline to carry out a computerised processing of an income tax return is nine months from the end of relevant financial year. An income tax return can be subject to scrutiny not later than three months from the end of the financial year in which the income tax return was filed. Further, once a return is subject to scrutiny, the audit of such return must be completed within 12 months from the end of the assessment year in which the income was assessable (for assessment year 2022–2023 onwards). However, if reference is made to the Transfer Pricing Officer, the period available for assessment shall be extended by 12 months. It may be noted that assessments can be initiated in two ways:

• Normal tax audit. Income tax assessments in India are conducted in a faceless manner, which completely eliminates the physical interface between the taxpayer and the assessing officer (AO), and instead involves the electronic interface right from the selection of cases for the purposes of scrutiny, allocation of case to an assessment unit, service of notice to taxpayers requiring furnishing information, personal hearings through video conferencing to preparation passing of draft and final assessment order.
• Search audit. The income tax law empowers authorities to conduct search and seizure proceedings of a taxpayer’s books of account, documents, cash, jewellery and other valuable articles. Such proceedings may be initiated where authorities, based on information in their possession, have reason to believe that a person has either wilfully failed to produce summoned books or is in possession of undisclosed assets representing income not disclosed or likely to be disclosed. Searches are mandatorily authorised through a search warrant. The powers conferred on tax authorities include entry into and search of any building, place or vessel where such items are suspected to be kept, and, where necessary, the authority to break open doors or locks if access is denied.

Reassessment. If any income of an assessee has escaped assessment for any assessment year, then the AO has the power to assess or reassess such income. The first show cause notice for reassessment must be issued within three years from the end of the relevant assessment year (escaped income less than INR 50 lakhs; where 1 lakh equals 100,000) or within five years (escaped income more than INR 50 lakhs; where 1 lakh equals 100,000). Not later than three months from issuing the show cause notice, the AO must issue a notice of reassessment stating that the taxpayer’s case is fit for carrying out a reassessment. The time limit to conclude the reassessment is within 12 months from the end of the financial year of issuing the reassessment notice.

Administrative remedies

Administrative claims may be raised by a taxpayer at various stages, including at the time of filing the return of income, during scrutiny in original or reassessment proceedings, or by way of representations before the CBDT. Where assessment or reassessment proceedings suffer from jurisdictional errors or procedural lapses, taxpayers may directly invoke the writ jurisdiction of the High Courts. Similarly, writ petitions may be filed where tax authorities or the CBDT fail to act on a taxpayer’s claim or request. High Courts exercise discretion in granting relief, including quashing notices or assessment orders. However, writ remedies are considered extraordinary, and taxpayers are generally expected to exhaust statutory appellate remedies such as appeals before the Commissioner (Appeals) or the Income Tax Appellate Tribunal unless the situation involves grave errors that warrant immediate intervention.

Statutory appellate remedies

The judicial phase in income tax cases in India begins after conclusion of the administrative phase, providing an opportunity to challenge decisions made by the tax authorities at higher judicial forums. Once a tax controversy emerges and a final assessment has been made to the prejudice of the taxpayer, such taxpayer can appeal against such an assessment. The appeal procedure and timelines are set out below.

• First appeal. The first appeal shall lie with the Commissioner (Appeals) within 30 days from the date on which the order to be appealed against is served. (There is unlimited power to condone the delay, provided reasons are satisfactory.)
• Second appeal. The decision of the Commissioner (Appeals) is appealable to the Income Tax Appellate Tribunal (ITAT) within two months from the end of the month in which the order appealed against is served. (There is unlimited power to condone the delay, provided reasons are satisfactory.)
• Third appeal. The order of the ITAT is appealable to the High Court within 120 days from the date of receipt of the order. The appeal stands only when a substantial question of law is involved. Any question of fact can only be dealt with up to the stage of the ITAT, as it is the last fact-finding authority. (There is unlimited power to condone the delay provided reasons are satisfactory.)
• Fourth appeal. An order of the High Court can be appealed to the Supreme Court (SC). No timeline is prescribed for filing such appeal except for a pre-condition that such appeal can be preferred only if the High Court declares it to be a fit case for preferring appeal to the SC. Alternatively, a writ petition can be filed if gross injustice has occurred due to the misuse of power by tax authorities, or if there has been an incorrect or excessive exercise of jurisdiction or violation of principles of natural justice.

Rectification

Other than the above, the taxpayer has the option to file a rectification application where there is any mistake apparent from the records. The income tax authority is bound to dispose of such application after due verification. An order of rectification is an appealable order.

Revision

In addition to the above, a taxpayer also has an option to seek revision before a higher authority. Where such revision is sought, the order passed under the revision application cannot be further appealed. Writ remedy may be explored provided that it is permitted in law.

The legislative framework, including under the ITA 2025, places continued emphasis on non‑adversarial dispute resolution. Please refer to Question 2.3, below, for a detailed explanation about the alternative methods available for resolving tax controversies under the income tax laws in India.

Alternative methods to the tax dispute resolution methods discussed above are put in place for resolving tax matters in India. Such alternative dispute resolution methods are in the form of Authority for Advance Ruling (AAR), Dispute Resolution Panel (DRP), Advance Pricing Agreement (APA) and Mutual Agreement Procedure (MAP). Owing to the huge backlog of cases before the traditional forums of tax litigation, the alternate redressal methods offer a viable alternative to residents and non-residents:

• AAR. A quasi-judicial body primarily set up to determine the income tax/withholding tax liability on transactions in advance, thereby avoiding uncertainty and lengthy litigation for taxpayers.
• DRP. A quasi-judicial body consisting of experts to whom the taxpayer can file an objection in relation to any variation that is proposed by the AO to the income or loss stated by the taxpayer. This option is available for variations proposed by a transfer pricing officer or for variations proposed in case of a non-resident. The decision of the DRP is binding on the AO and therefore, the final order passed by the AO must be in conformity with the findings of the DRP.
• APA. The CBDT will enter into APAs with any person for a maximum period of five years for determining the arm’s length price or specifying the manner in which the arm’s length price will be determined in international transactions. The APAs are of different types serving different objectives, namely: a unilateral APA entered into between the taxpayer and the CBDT; a bilateral APA entered into between the CBDT and the taxpayer subsequent to an agreement between the tax authorities of India and of another country; and a multilateral APA, which is an agreement between the taxpayer and the CBDT subsequent to an agreement between the competent authority of India and of other countries.
• MAP. India has entered into DTAAs with several countries. MAP is an alternative dispute resolution mechanism available to taxpayers under the DTAAs. Further, the purpose of invoking a MAP procedure is for resolving disputes that give rise to double taxation or taxation that is not in accordance with DTAAs. In such cases, MAP can alleviate double taxation either fully or partially.