In India, companies run according to the Companies Act 2013. This act monitors or governs the company’s operations or function.
A corporate company is considered a separate entity that is formed by a group of individuals. It is a legal entity which is separate from its shareholders. Every company operating in India is liable to pay taxes to the government of India out of their profits or income. The GOI has maintained a proper tax system which has to be followed by the company.
First of all let’s figure out, how many types of companies are there?
See companies are of two types:
Domestic Company: The company which has been originated in India and is registered under the Companies Act 2013. Even if the company is performing its operations outside India but has its headquarters in India, comes under domestic company.
International company: A company that is performing its operation in India but neither its headquarters is in India nor is registered under the Companies Act 2013.
What are Income for the company?
A company can have a lot of sources of income. They can earn from:
- Profits
- Capital Gains
- Sale of property.
- Interest
- Renting a property.
Taxation system for the corporates.
The following rates apply to the domestic company according to their turnover:
Also in addition:
The surcharge Rate:
| Particulars | Surcharge rate |
| Taxable income above ₹ 1 crore– Up to ₹ 10 crore | 7% tax calculated on a domestic company |
| Taxable income above ₹ 10 crore | 12% tax calculated on a domestic company |
BUSINESS TAX
India is dominated by unorganized businesses. Approx 333 million people opt for business as their source of income which constitutes 14.4% of total income
Now calculating income tax levied in business is easy but also important. The tax slabs for the businesses are as follows:
Surcharge rate if applicable:
Importance of Compliance
Proper tax compliance is vital for businesses to avoid legal issues and penalties. It’s important to maintain accurate records of all income, expenses, and financial transactions. Regular consultation with tax professionals can help businesses stay updated with the latest tax regulations and optimize their tax liabilities.
Conclusion
Understanding the business taxation system in India is crucial for the success and sustainability of any enterprise. By adhering to the tax slabs and surcharge rates, businesses can ensure compliance and focus on growth and development.
For expert advice and personalized assistance with your business taxation needs, contact Divadhvik today!
