CS PROFESSIONAL TAXATION OF COMPANIES
WHAT IS COMPANY?
Company means any Indian company or any body corporate under any law outside of India or any institution, an associationof body, whether incorporated or not and whether Indian or not and is declared for specified assessment year by general or special order of the board to be a company.
TAXATION OF DOMESTIC COMPANIES
Domestic companies are those companies which are incorporated under the company’s act 2013. It can be either a private or public company. Following are the taxation of domestic companies:-
- 30% flat rate taxation should be levied on the domestic company
- If total income exceeds 1crore but does not exceed 10crore then 7% surcharge is levied
- If total income exceeds 10crore, 12% surcharge will be levied
- 3% educational cess is also levied
- Corporate tax is levied on the global income of the company
TAXATION OF FOREIGN COMPANIES
Foreign companies are those companies which are being incorporated outside India and is governed by foreign law. Taxation of foreign companies are as follows:-
- 40% flat rate is being levied on the foreign company
- If total income exceeds 1crore but does not exceed 10crore then 2% surcharge is levied
- If total income exceeds 10crore, the surcharge will be 5%.
TAXATION OF LIMITED LIABILITY PARTNERSHIP
The firm shall have the meaning assigned in Indian partnership act, 1932 and shall include limited partnership under limited liability act, 2008
The partnership is an agreement between to person to share profit and losses of the firm either equally or decided accordingly and the members will be called partners.
Assessment of partnership under section 184
As per the scheme a partnership firm in the first assessment year shall be assessed as a firm if the following conditions are satisfied:
- The partnership is evidenced by an instrument for example partnership deed which is to be in writing containing necessary clauses.
- The individual shares of the partners as mentioned in that instrument (including how the profit and loss will be settled).
- A copy of the partnership deed signed by all the partners or their duly authorized agents, in writing is submitted along with the return of income.
The firm is being taxed with a flat rate of 30% and if the firm income exceeds 1 crore then he is liable to pay a surcharge of 12% will be chargeable. Firm and LLP are also charged under minimum alternate tax under section 115JC
Persons who are not resident in India in the previous year are charged to tax on–
(a) Income received or deemed to be received in India in the previous year whether or on behalf of such person and the date or place of its accrual being immaterial.
(b) Income whichaccrues or arises or is deemed to accrue or arise in India during the previous year, and the date or place of its receipt being immaterial.
How to check the residential status of a person?
- Must be in India for a period of 182 days or more.
- Must be in India for a period of 60 days or more in the previous
- Must be in India for a period of 365 days during the period of 4 years.
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