Corporate Tax Advisory involves technical knowledge and require understanding of complete Income Tax Provisions.
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Corporate tax also known as corporation tax or tax on companies. It is one of the form of levy of Direct tax on Companies. Unlike other person liable to pay income tax as per slab rate of income chargeable to tax, corporate tax is levied at single specific rate as regulated by Finance Act.
Corporate tax in India is levied on following heads of income:
- Profit or Gain from Business or Profession (PGBP)
- Capital Gain / Capital Loss
- Income from renting of property (House Property head)
- Income from Other sources in the form of interest / dividend etc (Other Sources Head)
In the case of loss in any year, then such loss return is also mandatorily required to file in order to access the loss. Such loss accessed by the Income Tax Department is allowed to be carried forward and set-off from future income as per the provisions of Set-off and carry forward of losses. All tax filing are require to be done on Income Tax Portal.
There are three type of losses which need to be segregated at the time of filing of return and the treatment for set-off of both the losses are different:
- Normal losses from business operations
- Losses on account of capital losses
- Losses on account of unabsorbed depreciation
Computation and calculation of corporate tax is one of the complex task, as it need the in-depth knowledge of Income Tax Act and its rules in order to provide correct computation and to give proper relief and exemption wherever required.
One need to consider the provisions of computation of tax as it differs from the nature and type of business within the same “Company” category. Computation differs based upon Domestic Company, Foreign Company, Partnership Firm, Bank, Co-operative society, Trusts etc.
For computing Corporate Tax, one must also calculate the computation as per the provisions of Section 115JB which is also termed as “MAT” (Minimum alternate Tax). MAT is applicable on all companies including foreign companies. The concept of MAT was introduced to make taxable those companies which make huge profits and pay dividend to shareholders thus effectively pay nil or nominal tax. MAT ensures for a minimum tax to be paid after adjusting the book profit as per the provisions of MAT. Tax Rate for FY 2019-2020 (i.e. AY 2020-2021) for MAT is 15%. After considering the tax under Mat, one must also take into consideration MAT credit, it is the credit of tax paid under provisions of MAT in previous years.
Tax Rate for Domestic Companies for FY 2019-2020 (i.e. AY 2020-2021)
If Gross Turnover or Gross Receipt in Previous year 2017-2018 does not exceed INR 400 crore
If the company has opted section 115BA
If the company has opted section 115BAA
If the company has opted section 115BAB
Any other domestic company
Apart from above mentioned tax rate surcharge is levied at the rate of 7% of taxable income if net income exceed INR 1 crore but remain below INR 10 crore. If net income exceed INR 10 crore then surcharge will be 12%
Health and Education cess will also be levied at the rate of 4% of income tax and surcharge.
Tax Rate for Foreign companies for FY 2019-2020 (i.e. AY 2020-21) is taxable flat at the rate of 40%, however if any Royalty received from Government or an Indian concern or fees for rendering technical services where such agreement has, in either case, been approved by the Central Government then tax rate would be 50%.
With the ever changing Law and regulatory requirements, we keep on track and advise the same on timely manner in order to ensure proper compliance. We at ReturnFilings.Com will understand the purpose of your corporate tax return filing and thereafter will provide you detailed analysis mentioning the law requirement and compliances need to fulfil in order to file corporate tax return economically and efficiently. We at ReturnFilings.Com will provide you details of regulatory filings in order to ensure proper smooth and timely compliances. We at ReturnFilings.Com are determinate to provide end to end solution; our motto is you concentrate on your business while we at ReturnFilings.Com will take care of all your compliances need.