Corporate Tax in India: Everything you need to know

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Corporate Tax in India is one of the crucial sources of income to the Indian Government. Most of us know about Income Tax or ITR Filing, but only a few of us know about Corporate Tax.

Therefore, in this article, we will read about Indian Corporate Tax in detail. Whether you are a corporate or a general reader, this guide is helpful for all of us.

What is Corporate Tax in India?

Corporate income tax (CIT) is a type of income tax.  Both domestic and foreign corporations pay taxes on their earnings in India. The CIT is set at a specific rate set by the income tax law, which is subject to annual rate changes in the union budget.

How is Corporate tax in India different from Income Tax of individuals?

Personal income tax is a type of income tax that individuals pay. Individuals are taxed at varying rates depending on their tax level. As a result, Eligible individuals have to do ITR Filing. Therefore, the income generated by a corporation is different from an individual’s income.

Corporate rate of Taxes in India

Corporate Tax Rate in India for domestic companies depends upon the income of the corporate.

As per the 2021-22 rates, the corporate tax is as follows.

  • Income Range of Up to 400 crore rupees gross turnover will have a taxation rate of 25 per cent.
  • On the other hand, the Income range of Gross turnover exceeding 400 crore rupees will have a taxation rate of 30 percent.
  • Similarly, The surcharges are- if the income range is between one crore to ten crore rupees then the Corporate Tax rate is 7 per cent.
  • And at last, if the income range of a corporation exceeds ten crore rupees then the corporate tax surcharge rate is 12 per cent.

Corporate Tax Rate for Foreign companies in India

The Corporate Tax rate for foreign companies in India also depends upon the nature of income. For example, Royalty of fees is obtained for technical services from the government or an Indian concern, approved by the Central Government then the tax rate is 50 per cent.

  • However, other types of income attract only 40 per cent of Corporate Tax.
  • Likewise, the surcharges are 2 per cent in the total range of income between 1 crore and ten crore rupees.
  • Though, If the total range of income exceeds ten crore rupees, the surcharges are 5 per cent.

Benefits of ITR Filing for Corporates in India

Now that we know all about Corporate Tax in India. Let us now look at the benefits of ITR filing or paying tax by Corporates in India. It is important to note that there are uncountable advantages of Income Tax Return (ITR) filing. Some of the most significant are as follows.

Avoid Penalties

When you file your ITR on time, you avoid paying penalties that aren’t necessary. Furthermore, corporations get a tax notice from the Income Tax department.

Maintain a reputable Position in the market

A tax notice from the Income Tax department can harm a corporation’s reputation in the market. Indeed, ITR filing brings credibility to your business organization.

Get Loans from the Banks comfortably.

We all know corporations need funds to run the business successfully. That’s where bank loans help corporations. Most banks ask for ITR receipts for the last three years when you apply for a loan. That’s why filing an ITR and having an Income Tax receipt can swiftly help you get the bank loans.

Received Income Tax Notice? No Need To Panic

Moreover, If you want any other guidance concerning ITR Filing, please feel free to talk to our business advisors at 8881-069-069.

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