Tax system in India
India taxes resident individuals on worldwide income and most companies on profits earned in India. The financial year runs from 1 April to 31 March, and residence is tested afresh every year.
Since Budget 2025, the new regime is the default for individuals: slabs from 0% to 30%, zero tax up to INR 12 lakh of ordinary income through the rebate, and up to INR 12.75 lakh for salaried people after the standard deduction. The old regime with deductions still exists as an opt-in.
Headline slabs are only the start. Surcharge on high incomes and a 4% health and education cess sit on top, so the top effective rate reaches 39% under the new regime. GST on spending is separate: 5%, 18% or 40% since the September 2025 reform.
Tax rates at a glance
- Income tax
- 0% - 30%New regime
- Wealth tax
- 0%
- Inheritance tax
- 0%
- Capital gains tax
- 12.5% / 20%
- Corporate tax
- 22% / 30%
- Dividend tax
- Slab rates
- GST
- 5% / 18% / 40%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesExpatsFoundersInvestorsCross-border groups
Watch out for
- India is not a low-tax jurisdiction for high earners. Surcharge plus 4% cess can lift the real top rate well above the 30% slab headline.
- New regime versus old regime is an annual choice that depends on your deductions. Salaried people with big HRA, 80C and home-loan claims can still pay less under the old regime.
- Residence status changes the whole picture. Non-residents pay tax only on Indian income, while full residents pay on worldwide income with foreign tax credit.
- GST is a spending tax, not income tax. An 18% standard GST rate means consumption planning matters alongside income planning.
Frequently asked questions
Is India a high-tax country?
For middle incomes it is moderate, with zero tax up to INR 12 lakh under the new regime. For very high incomes it is heavy: surcharge plus 4% cess takes the top effective rate to 39%.
Does India have a wealth tax?
No. India abolished wealth tax in 2015 and has not brought it back.
Which taxes matter most in India?
The main ones are personal income tax, corporate tax, capital gains tax, tax on dividends at slab rates, and GST of 5%, 18% or 40% on goods and services.