Corporate Income Tax

• A subsidiary in India is treated as a domestic company for tax purposes.
  
• Corporate tax rate is 25% plus applicable surcharge and cess for most domestic companies.
  
• Companies opting for concessional tax under Section 115BAA pay 22% plus surcharge and cess.
  
• No Minimum Alternate Tax (MAT) applies if the concessional rate is chosen.
  
• Filing of income tax return is mandatory regardless of profit or loss.
  

Withholding Tax (TDS)

• Subsidiaries must deduct tax at source on payments like salary, rent, and professional fees.
  
• Tax must be deposited within due dates along with e-filing of TDS returns.
  
• PAN of the payee is required to avoid higher TDS rates.
  
• Non-compliance leads to interest, penalties, and disallowance of expenses.
  
• Withholding tax also applies on payments to non-residents as per DTAA.
  

Transfer Pricing

• Transactions with parent company or related parties must be at arm’s length.
  
• Transfer pricing documentation and accountant’s report in Form 3CEB are required.
  
• Comparable pricing analysis must be maintained to justify pricing of intercompany transactions.
  
• Non-compliance may result in tax adjustments and penalties.
  
• Advance pricing agreements (APA) are available to mitigate risk.
  

Goods and Services Tax (GST)

• Subsidiaries must register under GST if turnover exceeds prescribed limits.
  
• Tax must be charged on supply of goods or services and paid monthly.
  
• Input tax credit can be claimed on eligible business purchases.
  
• GST returns must be filed periodically with invoice-level data.
  
• Cross-border services with the parent may be subject to GST under reverse charge.
  

Repatriation and Dividend Tax

• Dividends paid by subsidiaries to foreign parent companies are taxable in India.
  
• Dividend Distribution Tax (DDT) is abolished, but shareholders pay tax on dividends received.
  
• Tax is deducted at source when dividends are paid to non-resident shareholders.
  
• Double Taxation Avoidance Agreement (DTAA) may reduce withholding tax rate.
  
• Capital gains on sale of shares are also subject to tax as per holding period and treaty relief.