Starting a business in
🇮🇳India
Checked November 4, 2026 · How we score
Corporate tax
25.17%
Top income tax
30%
Setup from
$1,000
all-in, first year
Time to form
14 days
visit usually needed
Taxes in India
| Corporate income tax | 25.17% 22% base rate under Section 115BAA (effective 25.17% with 10% surcharge and 4% cess) for domestic companies that forgo most deductions; 25-30% under the older regime. Foreign companies pay 35% (plus surcharge and cess) on Indian income. The 15% rate for new manufacturing companies (Section 115BAB) lapsed for companies starting production after March 2024. DPIIT-recognised startups can claim a three-year tax holiday within their first 10 years, subject to the deadlines in the Act. |
|---|---|
| Personal income tax (top) | 30% New regime (default) slabs: 0% to INR 4 lakh, then 5%, 10%, 15%, 20%, 25% and 30% above INR 24 lakh, with a surcharge of up to 25% and 4% cess (effective top about 39%). Residents are taxed on worldwide income; Residents but Not Ordinarily Resident (RNOR) status exempts most foreign income. Salaried taxpayers with income up to about INR 12.75 lakh pay no tax after rebate. |
| Tax system | Worldwide income |
| Capital gains tax | 12.5%12.5% long-term capital gains on listed equity above INR 1.25 lakh (held 12+ months) and on most other assets (no indexation); short-term gains on listed equity are 20%. Gains on unlisted shares are 12.5% long-term (24 months) and slab rates short-term. |
| Dividend withholding (non-residents) | 20% |
| VAT / GST | 18% |
| Social security | GST is 18% on most services and 5-28% on goods. Employer provident fund contribution is 12% of basic salary. Dividends to non-residents are taxed at 20% (plus surcharge and cess), reduced by tax treaties. |
Forming a company in India
| Usual entity | Private Limited Company |
|---|---|
| Minimum capital | None |
| Setup cost (all-in) | $1,000–$3,000 |
| Annual running cost | $1,500–$5,000 |
| Time to incorporate | 14 days |
| Form remotely as a foreigner | No |
| Local director required | Yes |
| Local address required | Yes |
| Owners on public register | Yes |
| Statutory audit for small companies | Yes |
| Business banking for non-residents | Hard |
Residency and visas
India has no digital nomad visa and no golden visa; the e-Visa is for tourism and short business visits, and long stays need an employment, business or entrepreneur visa. Foreigners can be directors, but a private limited company needs at least one director who has stayed in India for 182+ days in the previous year.
| Digital nomad visa | No |
|---|---|
| Golden visa | No |
| Ease of residency for founders | 5/5 (1 = easiest) |
Special tax regimes
Section 115BAA concessional rate
22% base corporate rate (25.17% effective) for domestic companies that give up most exemptions and deductions.
Startup India (DPIIT recognition)
Recognised startups can get a three-year income tax holiday and other relief, subject to eligibility and the deadlines in the Act.
GIFT City IFSC
International Financial Services Centre in Gujarat offering a 10-year tax holiday in a 15-year block, no GST on services to non-residents and a 9% minimum alternate tax for units.
RNOR status
Returning individuals who qualify as Resident but Not Ordinarily Resident are taxed only on India-source income for up to 2-3 years.
Pros and cons
Why founders pick India
- Huge domestic market and deep engineering talent
- Concessional 22% base corporate rate
- Startup India tax holiday for eligible startups
- GIFT City incentives for financial services
Watch out for
- A resident director, local address and FEMA reporting are required
- Complex GST, TDS and transfer pricing compliance
- Non-resident banking and foreign exchange rules are strict
- High effective personal tax rates
- No residency pathway for founders without a job or business visa
Best for: Companies selling into India's consumer and enterprise market · Engineering and back-office operations using lower-cost talent · Fund managers using GIFT City
India: common questions
What is the corporate tax rate in India?
Domestic companies can opt for the concessional regime at a 22% base rate, or 25.17% effective with surcharge and cess. Foreign companies pay 35% (plus surcharge and cess) on Indian income, and the older regime has 25-30% rates.
Can a foreigner own 100% of an Indian company?
In most sectors yes, through the automatic route for foreign direct investment, followed by reporting to the RBI. Some sectors such as multi-brand retail, defence and insurance have caps or need government approval.
Do you need a resident director in India?
Yes. A company must have at least one director who stayed in India for 182 days or more in the previous calendar year. A foreign founder usually appoints a nominee resident director or relocates.
How much does it cost to register a company in India?
A private limited company through a professional typically costs about $1,000 to $3,000 including government fees, digital signatures and a registered office. Annual costs of $1,500 to $5,000 cover audit, tax filings and ROC compliance.
What are the personal income tax rates in India?
Under the default new regime, rates run from 0% to 30% (30% above INR 24 lakh) before surcharge and cess. With surcharge and 4% cess the top effective rate is about 39%.
Sources
Similar countries
Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.