India Tax Deductions 2025

Corporate Income Tax Deductions:

• Expenses wholly and exclusively incurred for business purposes are generally deductible.

Deductible expenses include:

• Salaries and wages.
• Rent and utilities.
• Cost of goods sold.  
• Interest expenses (subject to limitations).
• Depreciation of assets (as per prescribed rates).
• Research and development expenses (with specific conditions).  
• Specific deductions are available for investments in certain sectors.
• Losses can be carried forward for a specified period.

Individual Income Tax Deductions:

• Deductions for individuals vary based on residency status and income type.

Common deductions include:

• Investments in specified instruments (e.g., Public Provident Fund, National Savings Scheme).  
• Insurance premiums.  
• Certain medical expenses.  
• Interest on housing loans (with limitations).  
• Donations to approved charitable organizations.  
• Non-resident individuals may have limited deductions, depending on income sources.

Withholding Tax:

• Payments to non-residents may be subject to withholding tax.  
• The withholding tax rate is determined by the Income Tax Act and applicable Double Taxation Avoidance Agreements (DTAAs).

Double Taxation Avoidance Agreements (DTAAs):

• DTAAs may provide for reduced withholding tax rates or exemptions.  
• DTAAs vary based on the country of residence.

Goods and Services Tax (GST) Input Tax Credit:

• Businesses registered for GST can claim input tax credit on eligible purchases.  
• The input tax credit can offset output GST liability.

Depreciation:

• Depreciation is allowed on tangible and intangible assets used for business.  
• Depreciation rates are prescribed by the Income Tax Act.  

Interest Deductions:

• Interest expenses are generally deductible if related to business or income generation.
• Limitations may apply, particularly concerning related-party transactions.

Charitable Donations:

• Donations to approved charitable organizations are deductible, with limitations.  

Losses:

• Business losses can be carried forward and offset against future profits, with specific limitations.  

Capital gains:

• Capital gains deductions can apply depending on the nature of the asset being sold, and the time it was held.

Important notes:

• India's tax laws are complex, and deductions are subject to various conditions and limitations.  
• It is advisable to consult with a qualified tax professional in India for accurate and personalized guidance.