23/02/2026

BIZ & FINANCE MONDAY | FEB 23, 2026

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Entering India’s market – tax considerations for M’sian firms

Earnings, GDP growth to spur local equities in 2026: CIMB Securities KUALA LUMPUR: CIMB Secu rities Sdn Bhd remained positive on Malaysian equities in 2026, driven by 6.4% earnings growth, 4.4% gross domestic product (GDP) expansion, ringgit strength, policy catalysts and a potential rally ahead of the 16th General Election rally. In a note, CIMB Securities said domestic investors appear more constructive than foreign funds, which remain light on Malaysia amid concerns over earnings delivery. “Overall, we observe that domestic investors are more positive on the market than foreign investors, who remain relatively underweight Malaysian equities. “Key concerns centre on corporate earnings delivery, given past disappointments partly due to higher operating costs, increased taxes, United States import tariffs, and ongoing industry challenges,” it said. It noted that there was no major pushback on its “over weight” stance on banks. Apart from banks, investors showed interest in SD Guthrie and KL Kepong (land monetisation plans and crude palm oil price prospects), IJM (takeover offer by Sunway), Tenaga Nasional (tax update), property names (share price rally driven by attractive valuations), and Gamuda (recent share price weakness). CIMB Securities said year-to date (YTD), the FTSE Bursa Malaysia KLCI has risen 4.25% (or 72 points) to 1,752 points, led by the banking and consumer sectors; it has therefore reiterated its target of 1,772 points. On Jan 27, the bellwether index hit 1,771.25, surpassing its previous peak of 1,769.16 on Oct 8, 2018. Besides, it said foreign investors have also turned net buyers of RM1.4 billion YTD versus RM22.3 billion in net outflows in 2025, and the fourth quarter 2025 earnings season has also begun on a strong note. – Bernama Earlier in her career, from 2019 to 2022, Yatimah served on the board of the Malaysian Cocoa Board. With her background in ac counting, finance and international business, coupled with extensive experience in audit, risk management and remuneration oversight, Yatimah is expected to make a meaningful contribution to Kim Teck Cheong’s governance framework and long-term strategic direction. Her appointment signals the group’s continued emphasis on strengthening board independence and enhancing oversight as it navigates its next phase of growth.

WITH Indian Prime Minister Narendra Modi’s recent visit to Malaysia highlighting closer economic ties between the two countries, India’s

arm’s length principle. India maintains strict enforcement, though advance pricing agreements and safe harbour provisions reduce uncertainty. Foreign exchange Foreign exchange rules regulate capital inflows and repatriation. It is extremely important to keep track of money flows and the paper trail so that repatriation of funds will not be hindered. Choosing the right entry structure When entering the Indian market, Malaysian companies can choose from several structures, each with different tax and regulatory impli cations. Exporting into India without a physical presence generally avoids Indian corporate tax unless a PE is created, though certain payments may attract withholding tax under the India-Malaysia DTAA. For long-term expansion, incor porating an Indian subsidiary is the most common route, offering opera tional flexibility with an effective corporate tax rate of around 25-30%, while branches and project offices are taxed at significantly higher rates of close to 40%. Liaison offices are limited to non-revenue activities and are typically tax-neutral if properly structured. Other options, such as limited liabiity partnerships or joint ventures, may suit specific com mercial needs. Importantly, busi nesses must manage PE risks carefully, as unintended taxable presence can arise through agents, personnel, or fixed business locations, triggering Indian tax and transfer pricing obligations. India is not a low-tax jurisdiction, but it is increasingly transparent, rules-based and predictable. Challenges from the authority leading to disputes is common and can be time-consuming. The availability of tax and legal advice is plentiful in India. This article is contributed by Thannees Tax ConsultingServices Sdn Bhd managing director SM Thanneermalai (www.thannees.com).

and Central Goods and Services Tax (CGST), while states manage State Goods and Services Tax (SGST), stamp duty and profession tax (up to 2,500 rupees – about RM107 – annually per employee). There are also local property taxes. Corporate income tax Corporate income tax in India depends on entity type and presence. Domestic companies or subsidiaries face an effective rate of around 25-30% (22% base plus surcharge and 4% cess). Foreign branches are taxed higher, at about 40% (35% base plus surcharge and cess). Companies without a physical presence are generally not taxed unless they create a permanent establishment (PE), in which case profits from Indian activities become taxable. Dividend taxation Dividends are now taxed in shareholders’ hands as “Income from Other Sources”, with TDS (tax deducted at source) at 10%. For Malaysian shareholders, with holding is 20% plus surcharge/cess, but the India-Malaysia Double Taxation Avoidance Agreement (DTAA) caps it at 5% (ownership must exceed 10%). Customs duties Imports into India attract basic customs duty (varies by product), social welfare surcharge and Integrated Goods and Services Tax (IGST) applies to interstate trans actions (5–28%). Goods and Services Tax (GST) India’s GST applies to the supply of goods and services. The rates range from 0% to 28%, depending on the nature of the goods or services. GST is divided into CGST, SGST and IGST. Businesses can claim input tax credits, reducing overall tax cost. Malaysian companies setting up locally, GST planning is critical for cash flow and pricing. Transfer pricing Transactions related parties must comply with India’s transfer pricing rules under the between

For companies considering entry into India, a clear understanding of the highly Malaysian

complex tax and regulatory framework coupled with a sophisticated tax bureau cracy is extremely im portant because an adverse outcome can completely derail your business in India. Before you enter the Indian market you should be aware

growing importance to Malaysian businesses is hard to ignore. Now the world’s fourth-largest economy, with gross domestic product exceeding US$4 trillion (RM15.64 trillion) and

of the basic tax rules.

growth expected to remain above 6% in 2026, India offers scale and long-term opportunities few markets can match. Its expansion is driven largely by domestic con sumption, infrastructure spending and regulatory reforms, rather than exports, making it more resilient to global economic swings.

India’s multi-layered tax frame work India operates under a federal tax structure, where taxation powers are shared between the central and state governments. The central govern ment handles income tax, customs

A man stands in front of the Reserve Bank of India logo inside its headquarters in Mumbai, India, on Feb 6. It is extremely important to keep track of money flows and the paper trail so that repatriation of funds will not be hindered. – REUTERSPIC

Yatimah Sarjiman appointed director of Kim Teck Cheong PETALING JAYA: Kim Teck Cheong Consolidated Bhd, which is based in Kota Kinabalu, Sabah, has appointed Datuk Dr Yatimah Sarjiman ( pic ) as independent and non-executive director, strengthening the board with a seasoned corporate leader whose experience spans public institutions, government-linked companies and listed entities. ness administration in accounting and finance and international business from Universiti Utara Malaysia. person of PR1MA Com munication Sdn Bhd and a director of Perbadanan PR1MA Malaysia from 2023 until September 2025. Between 2022 and Jan

remuneration, risk man agement and audit com mittees. Yatimah’s governance experience extends to the Malaysia-Thailand Joint Authority and Felda, where she served as a board and committee member across procurement, investment, remuneration, risk and governance functions.

She also earned a master’s of business administration degree in the same discipline from Northrop University in the United States, as well as degrees in business accounting, information systems, and computer information systems from Idaho State University. Yatimah’s professional portfolio reflects extensive boardroom ex posure across key national insti tutions. Since April 26, 2025, she has served as a board member of Petronas Gas Bhd. Prior to that, she was chair

16, 2025, Yatimah held multiple roles within the Federal Land Develop ment Authority (Felda) and related entities. She

A filing to Bursa Malaysia noted that Yatimah brings more than three decades of experience in governance, risk oversight and strategic manage ment. Her appointment took effect on Feb 20. Yatimah holds a doctorate in busi

In addition, she was a board member of the asset Iinvestment and risk management committee of the Malaysian Agricultural Research and Development Institute.

was a member of the remuneration and services committee of Felda Investment Corporation Sdn Bhd. She also sat on the board of FGV Holdings Bhd, serving on the nomination and