Taxation Of Private Limited Company
A company may either be a resident or non resident, and the tax incidence is accordingly decided. According to section 6(3) of the income tax act, a company is said to be resident in india in any previous year if
- It is an Indian Company or
- During that year, the control and management of its affairs is situated wholly in India
If one of the above two tests is not satisfied the company would be a non resident in India during that previous year. According to section 5(1) of the income tax act, 1962, the total income of a resident would consist of
- Income received or deemed to be received in India during the previous year by or on behalf such company
- Income which accrues or arise or is deemed to accrue or arise to it in India during the previous year
- Income which accrues or arise to it outside India during the previous year.
Under section 5(2) of the Act, total income of non resident company would consist of
- Income received or deemed to be received in India in the previous year by or on behalf of such company
- Income which accrues or arises or is deemed to accrue or arise to it in India during the previous year.
Rates of Income Tax for the assessment year 2013-14
Domestic Company
1. For Income other than long term capital gains – 30% of total Income plus surcharge @ 5%
2. On Short term capital gains emanating from transfer of a short term capital asset being an equity share or unit of an equity oriented fund – 15% plus surcharge @ 5%
3. On Long term capital gains emanating from transfer of a long term capital asset – 20% plus surcharge @ 5%
4. Foreign Company
5. In the case of a company other than domestic company : On so much of the total income as consists of royalties received from government or an Indian concern after the 31st day of March 1961 but before 1st day of april 1976; or fees for rendering technical services received from government or an Indian concern in pursuance of an agreement made by it with the government or the indian concern after the 29th day of February 1964 but before the 1st day of april 1976, and where such agreement has in either case been approved by the central government. – 50% plus surcharge @ 2%
6. On other Income – 40% plus surcharge @ 2%
Note : Surchage is applicable in case total income exceeds Rs. One Crore.
Plus : Education Cess @ 2% and Secondary & Higher Education Cess @ 1% on tax & surcharge.
Marginal relief – In the case of a company having a net income of exceeding Rs. 1 crore, the net amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore