This is the first study of compliance costs of income taxation of companies in India. These are costs to companies of obligations under income tax law and in planning to save taxes. Opportunity costs such as when tax refunds are delayed are also included. Different cost concepts include social costs, gross versus net private costs and mandatory versus voluntary costs. Gross private costs include both legal expenses and illegal expenses such as bribes by companies on employees, on tax advice and other non-labour expenses. Estimates here are for the year 2000-01, based on a postal survey of 45 companies throughout India in August-September 2001. The response rate, at 1.15 percent, was disappointing. Since results are based on a small sample, they should be viewed as tentative. Gross compliance costs for 2000-01 are estimated at between 5.6 and 14.5 percent of corporation tax revenues. The estimates do not include bribe costs. Costs are comparable to those elsewhere if they are near the lower limit. Tax deductibility of legal expenses and cash flow benefits from the timing difference between taxable income and payment of tax result in net compliance costs of between minus 0.7 and plus 0.6 percent of corporation tax revenue, though these rise to around 2 percent when opportunity costs are included. Both gross and net compliance costs are regressive. Twelve sample companies paid excess tax (median value: 46 percent of tax due) since tax evasion penalty is not leviable under Indian law if assessed taxes have already been paid. Voluntary costs are estimated to lie between 19 and 43 percent of total compliance costs. The average sample company had 10 to 11 assessment years locked in disputes for tax or penalty. Adding incomplete assessment in the pre-appeal stage the number of open assessment years of a typical company is 12 to 14. Statistical analysis suggests that one extra disputed assessment year raises legal compliance costs by 5.7 percent. Based on the study, reform suggestions are made including the reform of 22 legal and procedural "hot spots" which add to compliance costs.