Spotlight on India

GEOGRAPHY

India a country in South Asia with a population of over 1.3 billion people is the second-most populous country and the seventh-largest country in the world by land area. It is known for its rich biodiversity home to several species of plants and animals that are found nowhere else in the world. It has a diverse landscape with a vast coastline, dense forests, fertile plains, and towering mountains. The country is divided into 28 states and 8 Union Territories, each with its own unique culture, language, and cuisine.

ECONOMY

India is the fifth-largest economy in the world, with a Gross Domestic Product (GDP) of over $3 trillion according to the International Monetary Fund (2022). The country’s economy is driven by several industries, including agriculture, manufacturing, services, and information technology. India has a large workforce, with over 600 million people employed in various sectors. India is known for its diverse culture, rich history, and rapidly developing economy. In recent years, India has emerged as a hub for business and investment, attracting investors from all over the world.

The Indian government has undertaken several initiatives to attract foreign investment and promote entrepreneurship. Some of the sectors that offer investment opportunities in India include renewable energy, healthcare, education, tourism, and infrastructure.

EASE OF DOING BUSINESS

In recent years, the Indian government has significantly raised its ranking for ease of doing business. In the 2021 World Bank Ease of Doing Business report, India was rated 63rd out of 190 nations. The quantitative economic metric used to determine this rating takes into account elements like the ease of business regulation and the preservation of exclusive rights related to property ownership and possession.

Owing to many reforms lately by the Indian government, the country’s business environment is defined by simpler corporate procedures, decreased bureaucratic red tape, and improve infrastructure making it easier for enterprises to set up and operate businesses in India. India has become a global commercial and investment hotspot as a result of the aforementioned factors, drawing in investors from all over the world.

TERMS OF RECRUITMENT

The several laws and regulations employers in India are required to consider when recruiting employees, include the Equal Remuneration Act, the Industrial Disputes Act, the Payment of Wages Act, the Minimum Wages Act, the Factories Act, and the Shops and Establishments Act. These laws outline the minimum requirements and procedures that must be followed during the recruitment process.

Employers in India are required to maintain records of their employees and the recruitment process. The records which must include name, age, qualifications, and details of employment, such as their salary, leave entitlements, and working hours, must be maintained in accordance with the provisions of the relevant laws and regulations

The Equal Remuneration Act mandates that employers must pay equal wages to men and women for work of equal value. Employers must also ensure that their recruitment processes do not discriminate against candidates based on any of these factors. Similarly, employers are required to ensure that their recruitment processes are non-discriminatory and transparent and that they comply with all applicable laws and regulations.

Other benefits employers must provide to their employees as provided for by the law include leave entitlements, such as annual leave, sick leave, and maternity leave. Also, the payment of Gratuity Act mandates that employers must provide a gratuity payment to their employees who have completed five years of continuous service.

Summarily, terms of recruitment in India are regulated by various laws and regulations to ensure fair and equitable employment practices.

TAX OBLIGATION

The Indian tax system consists of both direct and indirect taxes.

• Direct taxes are taxes that are levied on the income or wealth of an individual or corporation, while
• Indirect taxes are levied on goods and services. 

The primary direct tax in India is the Income Tax. The Income Tax is levied on individuals, Hindu Undivided Families (HUFs), firms, companies, associations of persons (AOPs), bodies of individuals (BOIs), local authorities, and any other artificial juridical person. The Income Tax in India is progressive as the more a business earns, the higher its tax liability. 

• Corporate Income Tax: In India, businesses must pay a corporate income tax at a rate of 40% for international businesses and 25% for domestic businesses.

• Goods and Services Tax (GST): GST is a value-added tax applied to the supply of goods and services in India. The current GST rate is 18% for most goods and services, with lower rates for basic commodities and higher taxes for luxury goods.
• Withholding Tax: Withholding tax is imposed on non-residents conducting business in India on a number of different sorts of revenue, including royalties and fees for technical services.
• Social Security Contributions: Employers in India are obligated to make contributions to the Employees’ State Insurance (ESI) and Employees’ Provident Fund (EPF) schemes for qualified employees.

Income Tax

Income per annum	Approximate Payment (USD)	Tax Rate
Individuals earning up to INR 2.5 lakh	3,400	No tax liability
Individuals earning between INR 2.5 lakh to INR 5 lakh	6,800	50%
Individuals earning between INR 5 lakh to INR 7.5 lakh	10,200	10%
Individuals earning between INR 7.5 lakh to INR 10 lakh	13,600	15%
Individuals earning between INR 10 lakh to INR 12.5 lakh	17,000	20%
Individuals earning between INR 12.5 lakh to INR 15 lakh	20,400	25%
Individuals earning above INR 15 lakh	Above 20,400	30%

In addition to the Income Tax, corporations are also liable to pay other direct taxes such as the Minimum Alternate Tax (MAT), Dividend Distribution Tax (DDT), and the Alternate Minimum Tax (AMT).

Corporate Tax Rate

The corporate tax rate in India is subject to 50%, while the remaining revenue is to a 40% tax rate respectively.

Income	Rate	Extra levy (Surcharge)
Corporate income tax	50%	2%
Other Income	40%	5%

Apart from direct taxes, corporations are also liable to pay indirect taxes in India, such as Goods and Services Tax (GST). Tax obligations of a new international business or corporation in India vary based on factors such as the type of business, the size of the business, the location of the business, and the nature of the business operations. Moreover, the Indian government provides several tax incentives to new international businesses and corporations to encourage investment and business development. 

WHY CONSIDER INDIA?

India has many benefits for companies looking to grow. The country is a prime place for business prospects due to its sizable population and swiftly expanding economy. A further significant benefit is the educated and highly literate workforce in India. With a democratic administration in place, India’s political environment is comparatively stable. For businesses looking to expand internationally, India’s expanding economy is a great option.

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