Tax is what you earn in one year and pay a small part of your income to the government in the form of tax in the next year. In India taxes on income, wealth, and capital gain are some of the most important taxes paid by the citizen.

• Corporate tax

Corporate tax is a direct tax levied on profits earned by businessmen in a particular period. Corporate tax is typically levied on a company’s revenue after deduction of COGS which means the cost of goods sold and SG&A which is sales of general and administrative expenses such as depreciation.

• Corporate tax in India

Corporate tax in India is levied on domestic as well as foreign companies.

Domestic – any company which is Indian is called a domestic company or if a company is foreign but a place of effective management is wholly situated in India, so it is also called the domestic company. An Indian company means a company registered under the companies act 1956.

Foreign corporate – Any foreign company is one which is not of Indian origin and has some part of management and control of affairs located outside India.

Income slab and tax rate for the financial year 2020-21 / the assessment year 2021-22.

Tax slab rate for the domestic company –

Automatic company is taxable at 30%, hi buddy tax rate is 25% but if the turnover of a corporation does not exceed Rs 400 crore in the previous year.

• Section 115 BA– A domestic company that is registered on or after March 1, 2016, and engaged in the business of manufacture or production of any article or thing and research in relation to (or distribution of) such article or thing manufactured or produced by it and also It is not claiming any deduction u/s 10AA, 32AC, 32AD, 33AB, 33ABA, 35(1)(ii)/(iii)/(iii)/35(2AA)/(2AB), 35AC, 35AD, 35CCC, 35CCD, section 80H to 80TT. Can opt for section 115BA on or before the due date of return by filing Form 10-IB online.
• Section 115 BAA – Total income of a company is taxable at the rate of 22% (from A.Y 2020-21), if the following conditions are satisfied; company is not claiming any deduction u/s 10AA or 32(1)(iia) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT (Other than 80JJAA).

– The company is not claiming any brought forward damages.

• Section 115BAB – Total income of a company is taxable at the rate of 15%if the following conditions are satisfied:

– The company is registered on or after 1st October 2019 and has started manufacturing on or before 31st March.

– The company is not formed by the division or reconstruction of an already existing business.

– The Company does not use any building previously used as a hotel or Convention Centre, as the case may be.

– Company is not claiming any deduction u/s 10AA or 32(1)(vii) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT.

• Surcharge –

1. A) 7% of Income-tax where total income exceeds Rs.1 crore
2. B) 12% of Income-tax where total income exceeds Rs.10 crore
3. C) 10% of income tax where domestic company opted for section 115BAA and 115BAB.

• Education cess: 4% of Income-tax (Plus Surcharge)

2. Tax Rates for Foreign Company:

A foreign company is taxable at 40%

• Surcharge:

1. A) 2% of Income-tax where total income exceeds Rs. 1 crore
2. B) 5% of Income-tax where total income exceeds Rs. 10 crore

• Education cess: 4% of Income tax [Plus Surcharge].

Some more think of Taxation

MAT –

Minimum alternative tax is payable under the Income tax act. MAT was introduce to aim those companies that makes vast profit and pay the dividend to their shareholder but pain no or minimum tax under the normal provision of the Income tax act. MAT is appropriate to all companies including foreign companies. MAT is calculated under sec.115 JB of the Income tax act. 15% of the book profit of the assessee , Under the free existing rules , book profit is calculated as per the Income tax act 1961 [ sec. 115 JB] .

Now talking about one more term which is Advance tax-

No what is Advance tax payment ? So it’s simply means paying your text liability in advance. You can paid tax in advance by authorised channel by the tax department. Some of the authorised channels are HDFC Bank, Syndicate Bank, Allahabad Bank, State Bank of India, ICICI Bank, RBI and more.

You can also pay through online on the website of the Income tax department.

Now the question is who is liable to pay advance tax;

1. Income received via capital gain on share.
2. Your tax liability should be 10,000 and above.
3. Interest earned on fixed deposit
4. Income earned from house property
5. Winning earned by lottery.

How to pay advance tax online :

The advance tax can be paid online through the online facility offered by the Income tax department.

1. Go to the official Government tin-nsdl.com.
2. Click “Services” – e-payment: Pay Taxes Online
3. Select the right channel to pay your income tax ( Advance tax)
4. Fill in the correct details in the form. You’ll have to fill in details such as the right assessment year, address, phone number, email address, bank name, captcha code and other such important details.
5. Once you are done filling in the details, you’ll be redirected to the bank’s Net Banking page. The income to be paid should be rechecked in this page.
6. Next, you’ll get details of your payment including your channel number.
7. It is important to report your payment after you’ve made the payment. You can do so by adding an additional entry under the paid tax page.

How to calculate advantage payment;

To follow the following steps you can easily calculate how much advance tax you will have to pay

Estimate how much income you earned in the financial year for which you are doing the advance tax calculation. These are the heads of income that should be taken into account for the income earned:

• Income from any interest earned from FDs, savings account, etc.
• Capital gains
• Professional income
• Rental income
• Income of minors if it is added to that of the taxpayer
• Any other income

1. Add your salary to the figure above to arrive at the gross taxable income (while advance tax is not applicable on your salary, the sum total may change your tax slab which will change the tax liability further)
2. Calculate the tax payable by applying the latest income tax slab that is applicable to you
3. As per the TDS slab, deduct the TDS that is likely to get deducted or which has already been deducted

If your tax liability after deduction of TDS exceeds Rs.10,000, you are liable to pay advance tax.

Written By – Yash Jauhari