Hi,
I have a query on the Corporate Tax Rate of a Wholly Owned Subsidiary of a Foreign Company.
A company is registered in India as a Private Limited Company,
100% equity is being held by the foreign entitiy.
Query , For Income Tax Purpose
1) would this be treated as a foreign company and taxed @40%
2) or it would be treated as a domestic company and taxed @ 30%
Please advice the reasons for the answer quoting the reference of the constitution if any
Many thanks
Regards
Ramesh
Clarification sought on tax rate for foreign company subsidiary in India: 30% domestic rate or 40% PE rate? A query was raised about the corporate tax rate applicable to a wholly owned subsidiary of a foreign company registered in India. The question was whether it should be taxed as a foreign company at 40% or as a domestic company at 30%. Responses indicated that generally, such a subsidiary is taxed as a domestic company at 30%. However, if it is considered a Permanent Establishment (PE) under a Double Taxation Avoidance Agreement, it would be taxed at 40%. References to the Income Tax Act 1961 and specific case law were suggested for further clarification. (AI Summary)
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