Draft Tax Bill Would Significantly Change the Indian Tax Landscape
Sep 22, 2009
The Indian government has recently posted draft legislation that would mark the most significant change to their tax structure in the last half-century. The proposal calls for a reduction in corporate tax rates to 25% from 30% for corporations. Individuals would also see a decrease in their statutory rates similar to those experienced by Indian corporations.
A new minimum tax is also proposed that would be calculated based upon gross assets rather than net income. This provision would likely affect foreign and domestic companies as the rules currently proposed stipulate that a company would be considered a tax resident in India when "its place of control and management, at any time in the year, is situated wholly, or partly, in India." It should further be noted that the tax changes will supersede all current tax treaties, and could also override any tax holidays previously granted by the India tax authorities.