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5.0       CUSTOMS DUTY


7.0       SERVICE TAX


A Company, whether Indian or foreign, is liable to taxes in India if it is resident in India. A corporation is resident if it is incorporated in India or wholly managed and controlled in India. Residents are taxed on all their income whether earned in India or outside India. Foreign income derived by a resident company is subject to corporation tax in the same way as Indian income. A branch of a foreign corporation is taxed as a foreign corporation.

There are various direct and indirect taxes and duties applicable to a company which will vary from situation to situation, like – Income Tax, Minimum Alternate Tax, Dividend Distribution tax, Securities Transaction Tax, Wealth Tax, Customs duty, Central Excise, Service Tax, Value Added Tax (VAT) etc. These taxes and duties chargeable to Indian Companies are governed by various legislations like – Income-tax Act 1961, Annual Finance Acts; Finance Act, 1994; Customs Act 1962; Central Excise Act 1944; State VAT and Central Sales Tax laws etc.

In India, the tax year is the fiscal year i.e from 1st April to 31st March and Companies are required to submit a final return of tax by 30 September (30 November for companies required to file a certificate on international transactions) of the assessment year, stating income, expenses, taxes paid and taxes due for the preceding tax year. Other than that, Advance Tax has to be paid by the companies during the year on 15 June (15% of total tax payable), 15 September (45% of total tax payable), 15 December (75% of total tax payable) and 15 March (100% of total tax payable).

Rates of Income Tax:

The Income Tax rate is 29% for domestic companies if Turnover/Gross Receipts is upto 5 Crore otherwise rate is 30% and 40% for foreign companies and branches of foreign companies. A Surcharge @ 7% also applies to domestic companies and @ 2% applies for foreign companies if taxable income exceeds Rs.1 Crore but limits upto 10 Crore and if taxable income exceeds Rs. 10 Crore surcharge applies @12% in case of domestic company and 7% in case of foreign company. An additional cess of 3% on income tax (inclusive of surcharge, if any) is payable towards Education and Secondary and Higher Education cess.

Surcharge at 12% is payable on additional taxes levied on distribution of profits by domestic companies / mutual funds / securitization trusts and on buybacks.

Important Changes in the Customs Act, 1962 and other related legislations and regulations vide Budget 2016-2017:

  • In respect of benefit of tax holiday under Section 10AA to units in SEZ, no deduction shall be available to new units commencing business on or after 1st April 2020.
  • Deduction of 100% for expenditure on Eligible Social Development Projects or Schemes has been withdrawn and no deduction will be available w.e.f. 1st April 2017 under Section 35AC.
  • Deduction under Section 35CCD (Skill Development Project) has been reduced from 150 percent to 100 percent This with be effective from 1st April, 2020.
  • No deduction shall be available if the specified activity commences on or after 1st April, 2017 under Section 80IA, 80IAB & 80IB. Earlier 100% deduction was available
  • Accelerated Depreciation/Weighted Deduction. (Changes applicable from 1st April, 2017)


Current Provision

Proposed Provision

Accelerated Depreciation



Expenditure on approved scientific research association with scientific research objective and certain specified institutions – Section 35(1)(ii)





150 per cent from 1 April 2017 to 31 March 2020 and 100 per cent from1 April 2020 onwards

Expenditure on contribution to approved scientific research company-Section 35(1)(iia)


100 per cent from 1 April 2017 onwards

Expenditure on Contribution to an approved research association, university, college, other institution to be used for research in social science or statistical research – Section 35(1)(iii)



100 per cent from 1 April 2017 onwards

Payment to a National Laboratory or

a university or an Indian Institute of

Technology or a specified person for

the purpose of an approved scientific

research programme- Section 35(2AA)


150 per cent from 1 April 2017 to 31 March 2020 and 100 per cent from 1 April 2020 onwards


Expenditure (other than the cost of any

land or building) on scientific research

in approved in-house research and

development facility incurred by the

company engaged in the business

of biotechnology or manufacture or

production of any article or thing except

specified items – Section 35(2AB).


150 per cent from 1 April 2017 to 31 March 2020 and 100 percent from 1 April 2020 onwards


Expenditure on a cold chain facility, warehousing facility for storage of agricultural produce, hospital,affordable housing project and production of fertilizer- Section 35AD


100 per cent from 1 April 2017

Expenditure on notified agricultural

extension project – Section 35CCC


100 per cent from 1 April 2017



  • Tax Incentives to Foreign Investors
  • Income accruing or arising to a Foreign company on account of storage of crude oil facility in India and it sale to any resident in India shall be exempt from tax if it is on account of an agreement/ arrangement entered into or approved by the Central Government or is notified by the central government.This amendment is applicable retrospectively from 01.04.2016 (Assessment Year 2016-17)
  • Income deem to accrue or arise in India of Foreign Mining Company through or from activities confined to display of uncut and unassorted diamonds in a special zone notified by the central government is Exempt from Tax

This amendment is applicable retrospectively from 01.04.2016 (Assessment Year 2016-17)

  • No Minimum Alternate Tax (MAT) will be applicable to Foreign Institutional investors / Foreign Portfolio Investors(FIIs/FPI) if:
  1. The foreign company is resident of country or specified territory with which India has entered into an agreement/ adopted an agreement u/s 90(1)/ 90A(1) and the assesee does not have a permanent establishment in India, or
  2. Companies which are tax residents of those countries or territories with whom India has not entered into any agreement and such companies are not required to seek registration under any law for the time being in force

This amendment is applicable retrospectively from 01.04.2001

  • Relaxation in eligibility criteria for Offshore Funds in Special Taxation regime u/s 9A.
    1. The benefits of Section 9A were available only to those investment funds who were a tax resident of a country with whom India had entered into Double Taxation Avoidance Agreement or Tax Information Exchange Agreement. However, the same is now being extended to a country or territory to be notified by the Central Govt.
    2. The Restriction that fund shall not carry on or control and manage, directly or indirectly any business in India or from India will be applicable only in the context of activities in India.

This amendment is applicable from 01.04.2017 (Assessment Year 2017-18)

  • Deduction in respect of bad and doubtful debt in the case of NBFC

Non-banking financial companies (NBFC) engaged in financial lending to different sector of societies are now also  eligible for deduction to the extent of 5% of its total income on account of  provision for bad and doubtful Debts under Section 36(i)(viia). This amendment is applicable from 01.04.2017(Assessment Year 2017-18

  • Additional Condition for Tax Neutral Conversion of company into LLP

An additional condition for tax neutral conversion of a company into Limited Liability Partnership (LLP)  has been imposed where the  book  value of the total assets should not exceed five crore rupees in any of the three preceding years. This amendment is applicable from 01.04.2017(Assessment Year 2017-18)

  • Section 80 JJAA – Revision in conditions for Tax incentive for employment generation
  • Employee whose total emoluments are less than or equal to twenty-five thousand rupees per month will only be considered for claiming 30% additional wages as a deduction
  • No deduction available where Government pays for EPF
  • Minimum number of days of employment in a financial year reduced from 300 days to 240 days. Condition of 10% p.a. increase in number removed. This amendment is applicable from 01.04.2017.

STT will be levied on the value of taxable securities transactions as under:



Payable by

Purchase/Sale of equity shares (delivery based)



Purchase of units of equity-oriented mutual fund (delivery based)



Sale of units of equity-oriented mutual fund (delivery based)



Sale of equity shares, units of equity-oriented mutual fund (non-delivery based)



Sale of an option in securities



Sale of an option in securities, where option is exercised



Sale of a futures in securities



Sale of unit of equity oriented fund to the Mutual Fund