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Corporate Tax Rates in India: How to Know Your Taxes?

Income tax, Wealth tax, and capital gains are some of the essential taxes customers pay annually in India. Like other types of taxes, corporate tax, be it domestic or foreign, is also an essential tax that the corporate house must pay yearly. Various corporate tax rates in India are categorised as per the types of corporate houses. We will briefly learn about what corporate tax is all about and the different types of tax rates.

The Indian economy survives on the taxes like income, wealth, and capital gains that we pay yearly. Moreover, corporate tax is also one of the most significant taxes the corporate houses must pay annually to the government of India. But what is a corporate tax? What are corporate tax rates in India for the financial years 21-22? We will learn in detail about the importance of corporate tax and the current tax rates.  

What is a Corporate tax?

Corporate tax is a direct tax levied on the profits earned by a company in a particular period. Further, the corporate tax rates in India are levied based on different profits earned by the corporate house or company. It is further decided based on the revenues earned by the company after essential deductions like depreciation are taken into account. Moreover, corporate tax is a form of income tax levied on income earned by businesses. Like other countries, India has a set of rules that apply to taxing corporate income.

Further, India levies the corporate tax on corporate houses based on the types of corporate companies to which the individual’s company belongs. There are two types of corporate companies in India. Domestic corporate, wherein the company is a foreign company that is controlled and managed by India as per the Companies Act of 1956.Next is the foreign corporation, wherein the company is of foreign origin, and some of its control and management is done outside India. 

GET YOUR CORPORATE TAX IN INDIA

Importance of Corporate Tax planning: 

Corporate tax planning is equivalent to strategizing financial business affairs, maximising profit, and minimising payable tax. Further, they also help in providing benefits like deductions, rebates, and exemptions. Tax management can be risky when it involves a considerable amount of money at stake. But if you hire a professional for handling the taxation process, then they will help in taking care of the entire process without incurring the loss of the huge amount of money that is invested. 

In India, there are various legal-financial firms that provide consultation and further ensure the proper implementation of the corporate tax. Most of all, assessment and total awareness about the tax laws in India and their corresponding rules and regulations also help in healthy tax planning. 

Corporate tax rates

Corporate tax rates for domestic companies

Range of Income Rate of tax
Upto 400 crores gross turnover 25%
Gross turnover exceeding Rs 400 crore 30%

 

Surcharge rates 

Particulars Domestic companies tax rates
Total income range between Rs 1 crore and Rs 10 crore 7% per rate of tax above
Total income range exceeding Rs 10 crore 12% per rate of tax

 

Corporate tax rates for foreign companies

Nature of Income Rate of tax
Royalty or fees received for any technical services from the government or an Indian concern as per agreements before April 1, 1976, 50%
Any other kind of income 40%

Surcharge rates

Particulars  Foreign companies tax rates
Total income range between Rs 1 crore and Rs 10 crore 2% as per the rate of tax
Total income range exceeding Rs 10 crore 5% as per the rate of tax

Top Corporate tax refunds 

Corporate tax provides various tax refunds or rebates. They are:

  • Domestic corporate companies help deduct dividends from other domestic companies.

One of the most important corporate tax rebates is that it helps domestic companies deduct dividends from other companies. Further, the most critical provision comes under the benefits of corporate tax refunds. 

  • The corporate tax refunds are applicable to venture into funds and capital enterprises investments. 

Another area where companies can avail of corporate tax refunds is to venture into investments of funds and capital enterprises. With the help of corporate tax refunds, corporate houses can venture into investing funds and further into capital enterprises. 

  • Deductions allowed in exports and undertakings.

The following most important tax rebates you can avail yourself of from corporate tax refunds are for exports and undertakings. When the company undergoes the exporting process and undertakings, it can avail of corporate tax deductions.

  • New infrastructure and power sources can also avail corporate tax refunds.

Another tax refund you can avail of is when you invest in new infrastructure and power sources. After all, when you venture into new infrastructure and power sources, tax payments for the same are pretty much a headache. 

  • Corporate tax rebate also helps business losses with provisions to carry the same for a maximum of 8 years.

One of the most important benefits of a corporate tax refund is that it helps business losses that have provisions to carry over the same for a maximum of 8 years. Moreover, it lessens the repercussions of business losses and continues to do the same for eight years. 

  • Interests, capital gains, and dividends are deducted along with corporate tax rebates.

Apart from the corporate tax rebates for the corporate houses, interests, capital gains, and dividends are also deducted. This reduces the excess expense that corporate houses can face while payment of interests, capital gains, dividends, and taxes. 

Thus, these are the corporate tax rebates/refunds the corporate houses can claim under the corporate tax.

Conclusion

Overall, corporate tax rates and further corporate tax are essential for developing any country’s economy, including India. Moreover, corporate tax rates are decided based on the types of corporate companies an individual owns. Be it domestic corporate or foreign corporate houses. Most of all, corporate tax planning is nothing but strategizing the financial business affairs, maximising the company’s profit, and minimising its burden of tax liabilities. 

Finally, with the help of professional tax consultants like Vakilsearch, corporate companies can gain tax rebates like deduction of dividends of other corporate companies, venture into investments of funds and capital enterprises, exports and undertakings, new infrastructure and power sources, business losses, and deductions in interests, capital gains, and dividends. Lastly, corporate tax rates in India depend upon the type of company they own. Further, all of us need to know your corporation tax rates in detail according to your type of company. 

Hence, corporate taxes and its rate are essential for you to know, in case you are planning to start a corporate company in India. 

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