Minimum Alternate Tax (MAT) is levied @ 18 percent of the adjusted book profits in the case of those companies where income-tax payable on the taxable income according to the normal provisions of the Income-tax Act, 1961 (the Act), is less than 18 percent of the adjusted book profits.
MAT credit is available for 10 years
Surcharge is applicable @ 7.5 percent in the case of domestic companies if the adjusted book profits are in excess of INR 10,000,000. Marginal relief may be available
Education cess is applicable @ 3 percent on income-tax (inclusive of surcharge, if any).
Dividend distributed by an Indian Company is exempt from income-tax in the hands of many shareholders. The Indian Company is liable to pay Dividend Distribution Tax (DDT) @ 16.609 percent (i.e. inclusive of surcharge and education cess) on such dividends
The amount of dividend declared by the parent company (i.e. holding more than 50 percent of capital) is likely to be reduced by the amount of dividend received from its subsidiary company for the purposes of computing DDT payable by the parent company if:
- such dividend is received from its subsidiary
- the subsidiary has paid DDT on such dividend; and
- the parent company is not a subsidiary of any other company
Further, dividend paid to any person for and on behalf of New Pension System Trust is likely to be reduced.
Income received by unit holders from a Mutual Fund is exempt from income-tax. The Mutual Fund (other than equity oriented mutual fund) is likely to pay income distribution tax of:
- 27.681 percent (inclusive of surcharge and education cess) on income distributed by a money market mutual fund or a liquid fund
- 13.841 percent (inclusive of surcharge and education cess) on income distributed to any person being an individual or a Hindu Undivided Family by a fund other than a money market mutual fund or a liquid fund; and
- 22.145 percent (inclusive of surcharge and education cess) on income distributed to any other person by a fund other than a money market mutual fund or a liquid fund.
(1) The following incomes in the case of non-resident are taxed at special rates on gross basis:
Nature of Income
Interest received on loans given
in foreign currency to Indian
concern or Government of India
Income received in respect of
units purchased in foreign
currency of specified Mutual
Funds / UTI
Royalty or fees for technical
For Agreements entered into:
- After 31 May 1997 but before
1 June 2005 – @ 20%
- After 1 June 2005 – @ 10%
Interest on FCCB, FCEB /
Dividend on GDRs(b)
(a) These rates may further increase by surcharge and education cess
(b) Other than dividends on which DDT has been paid
(c) In case the non-resident has a Permanent Establishment (PE) in India and the royalty/fees for technical services paid is effectively connected with such PE, the same could be taxed @ 40 percent (plus surcharge and education cess) on net basis
(2) Tax on non-resident sportsmen or sports association on specified income @ 10 percent plus applicable surcharge and education cess.