Similarly, companies also pay direct tax in the form of corporate tax. Let us have a look at what it is and how it works.
What is Corporation Tax?As mentioned above, corporate or corporation tax is the tax paid by entities that are registered as companies under the Indian company law. It applies to domestic as well as foreign companies operating in India. The tax is based on the net profit generated by a company in a financial year.
What is Corporate Tax Rate?Now that you know what corporate tax is, let us have a look at the tax rates.
The IT department adjusts the corporate tax rate every year. For the assessment year 2019-20, the corporate tax rates for domestic companies are as follows-
|Gross Turnover||Corporate Tax Rate|
|Up to Rs. 250 crores||25%|
|Above Rs. 250 crores||30%|
For foreign companies, the corporate tax rates in India depend on the taxation agreements made between India and the home country of the company.
Are There Any Additional Taxes Apart from Corporate Tax?In addition to the corporate tax rates discussed above, there are also several additional taxes that a company is required to pay. Some of the most important ones are as follows-
|Particulars||Applicable Tax Rate|
|Surcharge||i) Total income between Rs. 1 crore to Rs. 10 crores- 7% of the calculated tax for domestic companies and 2% of the calculated tax for foreign companies ii) Total income above Rs. 10 crores- 12% of the calculated tax for domestic companies and 5% of the calculated tax for foreign companies|
|Health and Education Cess||4% of the calculated tax|
|Minimum Alternate Tax or MAT||If the calculated tax rate of a domestic or foreign company is less than 18.5% of their book profits, it is required to pay corporate tax at a fixed rate of 18.5%|
|Dividend Distribution Tax or DDT||Companies are also required to pay DDT at the rate of 20.56% on the dividends they pay to their shareholders|
Corporate Taxation in IndiaCorporate taxes in India come with a host of provisions for domestic and foreign companies.
While companies can make use of such provisions to reduce their tax liabilities, they should not misuse them to evade taxes. Tax evasion is a crime and could lead to serious financial and legal obligations for companies.
Click here to visit our personalized online advisor that gives you the financial expertise you need.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
Disadvantages of Early Retirement - What Happens When You're Not Working?
Early retirement seems to be good, many people enjoy life without working especially with extra earnings. But they are not aware about the cons. Lets explore the disadvantages of retiring early to save your retirement life.
5 Benefits of Health Insurance that Makes it a Must Have Cover
Here are the 5 benefits of health insurance that makes it a must to cover
When Should You Withdraw Money from a Mutual Fund?
In case of a sudden change in fund strategy or an underperformance scheme for more than 3-4 years, it makes sense to withdraw money.
How To Apply For Personal Loan
Applying for a personal loan has become extremely easy these days. With the increase in applicants, banks and other financial institutions have made the process very simple.