Indian Taxation
Taxes in India are levied by the Central and State Governments. Local authorities also impose minor taxes. The authority to tax comes from the Constitution, which mandates that no tax shall be levied without legal backing.
Individuals whose income exceeds the non-taxable limit are subject to income tax based on their residential status. Income tax rates are set by the Union Budget each year.
Residential status can be:
- Resident
- Resident but Not Ordinary Resident
- Non-Resident
Residents are taxed on all income, including foreign income. Non-residents are taxed only on income received or accrued in India. Not-Ordinarily Residents are taxed on income from Indian sources and businesses controlled from India.
Income is categorized into five heads:
- Salaries
- Income from House Property
- Business or Profession Profits
- Capital Gains
- Other Sources
The Income Tax Act provides incentives for Non-Resident Indians (NRIs) and Indian Nationals abroad. NRIs can invest in shares with close relatives in India, with repatriation benefits if the investment is made with foreign funds. Special tax incentives are available only to NRIs.
For help with Indian taxes, contact us at support@novataxation.com.