§ 1
How the pieces fit together
From 1 April 2026 income tax is governed by the Income-tax Act, 2025, which replaced the 1961 Act. The concepts most companies rely on carried over: a concessional regime for domestic companies at an effective rate of about 25.17% without most incentives, advance tax in four instalments, withholding on payments to residents and non-residents, and transfer pricing for transactions with associated enterprises.
GST is charged on supplies of goods and services, with input tax credit for GST paid on purchases. Exports of services are zero-rated: a company can export without paying tax under a letter of undertaking and claim a refund of the input tax it has accumulated. The conditions for treating a service as an export are strict, and the 'intermediary' rules have caused many support-service companies to pay GST on what they thought were exports.
Transfer pricing requires that dealings with group companies (services, royalties, loans, guarantees, cost recharges) are priced as independent parties would price them, documented each year, and reported in an accountant's report filed with the return. Groups above the thresholds also file a master file and country-by-country report notifications.
§ 2
The law that applies
| Income-tax Act, 2025 (in force from 1 April 2026) | Corporate tax, advance tax, TDS, tax audit, transfer pricing and assessments. |
|---|---|
| Double taxation avoidance agreements | Reduced withholding on dividends, interest, royalties and technical fees; permanent establishment rules. |
| CGST, IGST and State GST Acts, 2017 | Registration, returns, input tax credit, exports, refunds and e-invoicing. |
| Transfer pricing rules and safe harbour rules | Methods, documentation, accountant's report, master file and safe harbour margins. |
§ 3
Issues and how we solve them
The problems that most often hold up or complicate this work, and how we deal with each.
Issue 1
Payments to the parent are made without the correct withholding.
Our approach
We classify each cross-border payment (royalty, technical service, reimbursement, purchase of software), apply the treaty rate where the recipient provides a tax residency certificate and Form 10F, and prepare the remittance certificates the bank needs.
Issue 2
GST refunds on exports are rejected or held up.
Our approach
We check that each export meets the five conditions for export of services, align foreign exchange receipts with invoices, reconcile input tax credit to supplier filings and file refund applications with complete evidence.
Issue 3
The markup charged to the parent is challenged in a transfer pricing audit.
Our approach
We prepare documentation with a functional analysis that reflects what the Indian entity really does, current-year benchmarking, and segmentation where it carries out more than one type of activity. Where the safe harbour rules fit, we evaluate opting in for certainty.
Issue 4
Tax notices pile up without a coordinated response.
Our approach
We track notices across the income tax and GST portals, reply within time with documentary support, and represent the company in assessments and first-level appeals.
§ 4
Process and timeline
- 1
Review
OnboardingHealth check of past returns, registrations, regime choice and intercompany arrangements.
- 2
Monthly
7th, 11th and 20thTDS computation and payment, GST returns and input tax reconciliation.
Filing: TDS challans · GSTR-1 · GSTR-3B
- 3
Quarterly
QuarterlyTDS returns and advance tax estimates.
Filing: TDS returns · advance tax
- 4
Annual
September–DecemberTax audit, transfer pricing study, accountant's report, income-tax return, GST annual return.
§ 5
Ongoing obligations
| Obligation | Basis | When |
|---|---|---|
| Advance tax instalments | Income-tax Act, 2025 | 15 June, 15 September, 15 December, 15 March |
| TDS deposit | Income-tax Act, 2025 | 7th of the following month |
| Income-tax return with transfer pricing report | Income-tax Act, 2025 | 30 November (with TP), 31 October otherwise |
| GST returns | CGST Act, 2017 | Monthly (11th and 20th) |
| GST annual return and reconciliation | CGST Act, 2017 | 31 December |
§ 6
Our scope of work
Included
- Tax regime evaluation
- Advance tax and return preparation
- TDS on domestic and cross-border payments
- GST registration, returns and refunds
- Transfer pricing documentation and accountant's report
- Notice responses and assessment representation
Not included (quoted separately)
- Appeals before the Tribunal and courts (quoted separately)
- Advance pricing agreements
§ 7
Questions
What is the corporate tax rate for a foreign-owned Indian company?
A domestic company, including one owned by a foreign parent, can opt for the concessional regime at an effective rate of about 25.17% including surcharge and cess, giving up most exemptions and incentives.
Do services to a foreign parent attract GST?
If the services qualify as exports, they are zero-rated and can be supplied without GST under a letter of undertaking. Whether they qualify depends on the contract, the place of supply and how payment is received.
When is a transfer pricing study required?
Whenever a company has international transactions with associated enterprises. An accountant's report must be filed with the tax return, and documentation must be maintained if the transactions exceed the prescribed value.
Prepared by CA Utsav Dogra, Chartered Accountant, ICAI M. No. 542375, SU and Company · Last reviewed 4 November 2026. General information only, based on the law as it stood on that date; it is not advice for any particular case.