present rate of corporate tax is 25 percent.
However, industries, other than cigareette, bidi,
cigar, khainy, tobacco, alcohol or beer, will not
be imposed more than 20 percent income tax on
their industrial come.
single or married status of an individual
determines the relief to which he/she is entitled.
Taxable income includes profits from a business,
income from salaries along with other benefits
provided by the employer, income from house rent,
interest, dividends and other sources. The first
Rs. 50,000 of income of a married couple or family
are exempt from income tax. In the case of an
individual, the exemption limit is 40,000. The
rates of income tax are as below.
of Income tax
15 percent on the first additional Rs. 75,000
25 percent on balance.
Technical Services Fees and Management Fees
technical service fees and management fees will be
taxed only at a concessionery rate of fifteen
percent. Income tax will not be levied on the
interest on foreign loan.
Income Tax Act of 1974 has provision for deduction
of expenses from taxable corporate and personal
income. Expenses wholly and exclusively incurred
in the generation of income are deductible from
taxable income. Furthermore, five percent of the
total gross income of industrial units will be
allowed for deductions for advertisement ,
entertainment and other contingencies.
are entitled to depreciate the fixed assets either on a straight
line method or on reducing instalment system. All plant, machinery
and equipment qualify for depreciation at the rate of five to twenty
five percent per annum. While calculating depreciation on the fixed
assets, industries shall be entitled to depreciate additional one
third of the rate of depreciation that prevails to others.
In order to
replace the existing sales tax by value added tax the Department of
Value Added Tax (VAT) has been established by which tax system will
be made more realistic and transparent. The tax will be ascertained
on the basis of value addition and based on records.
In order to avoid the double
taxation on incomes of foreign investors, the government will take
necessary action to conclude agreements for the avoidance of double
taxation with the countries of the concerned foreign investors. At
present, agreements for the avoidance of double taxation have been
concluded with India, Norway and Thailand