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Indirect Tax Laws

Notes Rates of Withholding Tax

Current rates for withholding tax for payment to non-residents are:-
(i) Interest 20%
(ii) Dividends paid by domestic companies: Nil
(iii) Royalties 10%

(iv) Technical Services 10%
(v) Any other services Individuals: 30% of the income

Notes Capital assets are held for more than three years and In case of shares, securities
listed on a recognized stock exchange in India, units of specified mutual funds, the period
for holding is one year.

Companies: 40% of the net income

The above rates are general and are applicable in respect of countries with which India does not
have a Double Taxation Avoidance Agreement (DTAA).

Tax Incentives

Government of India provides tax incentives for:-
 Corporate profit

 Accelerated depreciation allowance
 Deductibility of certain expenses subject to certain conditions.

These tax incentives are, subject to specified conditions, available for new investment in
 Infrastructure,

 Power distribution,
 Certain telecom services,

 Undertakings developing or operating industrial parks or special economic zones,
 Production or refining of mineral oil,

 Companies carrying on R&D,
 Developing housing projects,

 Undertakings in certain hill states,
 Handling of food grains,

 Food processing,
 Rural hospitals etc.

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