Income Tax Rates for Foreign Companies (AY 2022-23)

In the case of foreign companies (companies other than the domestic companies), there is no change in the tax rates proposed, in respect of FY 2022-23/ AY 2023-24, as per the Finance Bill 2022. Therefore the tax rates for foreign companies shall remain the same, as were specified for the FY 2021-22/ AY 2022-23 in the Finance Act 2021.

Proposed Income Tax Rates for Foreign Companies (FY 2022-23/ AY 2023-24)

Same as applicable for FY 2021-22/ AY 2022-23.

Income Tax Rates for Foreign Companies (FY 2021-22/ AY 2022-23)

Income tax rates for companies other than domestic companies (i.e. foreign companies) in respect of FY 2021-22/ AY 2022-23, as per the Finance Act, 2021 remained the same as were applicable in respect of FY 2020-21/ AY 2021-22, as per the Finance Act, 2020, i.e. no change from last year.

Income Tax Rates for Foreign Companies (FY 2020-21/ AY 2021-22)

Income tax rates for companies other than domestic companies (i.e. foreign companies) in respect of FY 2020-21/ AY 2021-22, as per the Finance Act, 2020, are as under:

Nature of IncomeIncome Tax Rate
Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after 31/03/1961, but before 01/04/1976, or fees for rendering technical services in pursuance of an agreement made after 29/02/1964 but before 01/04/1976 and where such agreement has, in either case, been approved by the Central Government50%
Any other income40%

In other words, in the case of a company other than a domestic company, royalties received from Government or an Indian concern under an approved agreement made after 31/03/1961 but before 01/04/1976, shall be taxed at 50%.

Similarly, fees for technical services received by such company from Government or Indian concern under an approved agreement made after 29/02/1964 but before 01/04/1976 shall be taxed at 50%.

On the balance of the total income of such company, the tax rate shall be 40%.

In addition, Surcharge, Health & Education Cess (HEC) and Minimum Alternate Tax (MAT) provisions, shall be applicable in the case of Foreign Companies, as under:

Surcharge

The tax so computed (including under provisions of Sections 111A, 112 or 112A of the Income-tax Act) shall attract surcharge at the rate of 2% where total income of such company exceeds Rs. 1 Crore but is upto Rs. 10 Crores and at the rate of 5% where total income of such company exceeds Rs. 10 Crore, subject to provisions relating to marginal relief.

HEC

The aggregate amount of Income Tax and Surcharge, shall be subject to HEC @ 4%, in all cases.

MAT

Where normal tax liability of the Foreign Company is less than 15% of the book profits, except in the case of companies covered under Explanation 4 of Section 115JB of the Income Tax Act, 1961, the MAT shall be applicable @ 15% of book profits. Besides, surcharge and Health and Education cess shall be applicable, as above.

Related Posts:

Income Tax Slabs/ Rates:Income Tax Cess, Surcharge & Rebate
Resident IndividualsEducation Cess Rates
NRIs/ HUFs/ AOP/ BOI/ AJPSurcharge Rates
Partnership Firms and LLPsMarginal Relief from Surcharge
Domestic CompaniesRebate u/s 87A for Individuals
Foreign Companies 
Co-operative Societies 
Local Authorities 

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