Foreign Company – Section 2(46) | Income-tax Act, 2025 vs 1961

§ 2(46) · Income-tax Act, 2025

Foreign company

ITA 2025 · 2(46) ITA 1961 · 2(23A)
Definition — Section 2(46)

Means a company which is not a domestic company. A "domestic company" is defined under Section 2(42) of this Act as an Indian company, or any other company which has made prescribed arrangements within India for declaration and payment of dividends out of its income liable to tax. Any company that does not meet the domestic company definition is therefore a foreign company.

Act Comparison
Income-tax Act, 2025
2(46)
Foreign company
Income-tax Act, 1961
2(23A)
Foreign company
Key Points
  • Maps to Section 2(23A) of the 1961 Act
  • Foreign companies are taxed at 40% (plus surcharge) vs 22% for domestic companies
  • Indian subsidiaries of foreign companies are domestic companies, not foreign companies
💡 Practical Note

The branch of a foreign company in India is taxed at the foreign company rate — this is why setting up an Indian subsidiary can be more tax-efficient.

Published by Simplified Tax India — Clear, section-wise comparison of Income-tax Acts. ← Back to Section 2 Definitions Table
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