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TAXATION IN INDIA & CHINA

WHAT IS TAX ?
A fee charged ("levied") by a government on a product, incomes, or activity. If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then it is called an indirect tax.

PURPOSE OF TAX
The purpose of taxation is to finance government expenditure. One of the most important uses of taxes is to finance public goods and services, such as street lighting and street cleaning. 1. Increase in the quantum of revenue collection 2. Improvement in services of the government 3. Improve employment at all industry verticals 4. Induction of modern technology in to the system

COMPARISON
(INCOME TAX RATES)
INDIA
Tax

CHINA
Tax on individual income is

on individual income is progressive from 10%-30%, with education CESS of 3%. taxable- 30%, foreign company40%; additional surcharge for income above 1 crore- 5% for domestic, 2% for foreign; additional 3% CESS. < 18.5% of book profits pay 18.5% MAT+ surcharge+ CESS; effective rate to be 20.01% for domestic & 19.44% for foreign

progressive from 3%-45%.


Corporate tax rate for domestic

Limited liability company in India

& foreign companies is 25%.


Small companies- 20%. State encouraged hi-technology

Companies

companies- 15%

INCOME TAX RATES


INDIA
TAX % INCOME (INR)

CHINA
TAX % 3% 10% MONTHLY INCOME (CNY) 1 - 1,500 1,501-4,500 4,501-9,000 9,001-35,000 35,001-55,000 55,001 - 80,000 80,001 and above

0%

1 180,000

10%

180,001 500,000

20% 25%

20%

500,001 800,000 30% 35% 45%

30%

800,001 and above

CAPITAL GAINS
INDIA
LTCG taxation: EQ shares, M,F STT paid- nil Listed securities, MF units, ZCB- 10% / 20%. Default 20% with indexation. STCG taxation: EQ shares, M,F STT paid, BEL taken- 10%. EQ shares, MF, STT paid- 15%. Default- clubbed with income.

CHINA
Individuals capital gains tax-

20%. 10% TDS from capital gains of a foreign company in China. Capital gains from sale of real estate (SP CP):
Normal- 20%

Gains > 50% of CP- 30% -

60%. Gains over 200% - 60%

OVERSEAS INCOME TAXATION


INDIA
An individual and company who

CHINA
An individual and company who

are Indian residents are also taxed on their income outside India and receive a credit for overseas taxes. Qualification for residence for an individual:
residence in India of at least 182 days in PY. residence in India at least 60 days in PY and at least 365 days in the 4 years preceding PY.

are Chinese residents are also taxed on their income outside China and receive a credit for overseas taxes. Residence qualification:
Permanent residence/ lived <5 yrs-

Indian resident taxed on overseas

Chinese income taxed, overseas income taxed if origins in china. Individuals staying > 5 yrsworldwide income taxed.

income.

TDS COMPARISON
INDIA
Employer obligated for TDS

CHINA
Employer obligated for TDS

from salaried employee on monthly basis and additional PF and insurance contributions.
Employer contribution 12%
Employee contribution- 10% -

from salaried employee on monthly basis and social security contributions. Social security having 3 partsbasic pension, personal accounts, additional payment.
Employer- around 30% Employee- around 11%

12 % Other deductions (for NR): dividend- 0% Interest- 20% Royalty- 10% Technical fees- 10%

Other deductions: Dividend- 10% Interest- 10% + 5% business tax Royalty- 10% + 5% business tax Capital gains- 10%

DEPRECIATION RATES COMPARISON


INDIA
ASSET BLOCK Building other than residence Building used for residence RATE 10% 5%

CHINA
SLM used for depreciation.
ASSET CLASS Buildings Intangible Assets YEARS 20 10

Furniture & Fittings Plant & Machinery


Computer (including software) Intangible assets Motor cars

10% 15%
60% 25% 15%

Electronic Equipment 3 Machinery 10

THANK YOU

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