Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Rate of Income Tax in case of a Domestic Company

Rate of Income Tax in case of a Domestic Company
Rate of Income Tax in case of a Domestic Company

(A) For Assessment Year 2020-21 and onwards, all Domestic Companies can pay Tax under any of the following two options:

Option -1

(i)                  Normal Rate of Tax as per newly inserted section 115BAA, 22% — Effective Rate of Tax including Surcharge @ 10% and H&EC @ 4% = 25.168%

(ii)                MAT provisions not applicable
Option once exercised cannot be withdrawn

All conditions prescribed under section 115BAA (2) should be satisfied. i.e. deductions and incentives are not to be allowed

Option -2

(i)            Where the Total Turnover or Gross Receipts of the previous year 2017-18 does not exceed Rs. 400 Crore.

Effective rate of tax including surcharge as applicable and H&EC 26% if total income does not exceed Rs. 1 Crore, 27.82% if the total income exceeds Rs. 1 Crore or 29.12% if the total income exceeds Rs. 10 Crore.

(ii)           In any other case

Effective rate of tax including surcharge as applicable and H&EC 31.2% if total income does not exceed Rs. 1 Crore. 33.38% if the total income exceeds Rs.1 Crore or 34.944% if the total income
exceeds Rs. 10 Crore .

MAT as per the provisions of section 115JB shall be applicable 15% + Surcharge @ 7% or 12%, as the case may be.

All the deductions and incentives which are hitherto available shall be allowed.

(B) A manufacturing Domestic Company Set-Up and Registered on or after 1.10.2019, and has commenced manufacturing or production of an article or a thing on or before the 31.3.2023 can pay tax under any of the following two options:

Option -1

Normal rate of tax as per newly inserted section 115BAB (1) on income on account of manufacturing or production of an article or a thing — 15%

(i)                  Effective Rate of Tax including Surcharge @ 10% and H&EC @ 4% = 17.16%

(ii)                MAT provisions not applicable.

Option once exercised cannot be withdrawn

All conditions prescribed under section 115BAB (2) should be satisfied i.e. deductions and incentives are not to be allowed.

Option -2

Rate of Tax as per existing normal provisions :

(i) Where the total turnover or gross receipts of the previous year 2017-18 does not exceed Rs. 400 Crore –

Effective rate of tax including surcharge as applicable and H&EC 26% if total income does not exceed Rs. 1 Crore, 27.82% if the total income exceeds Rs. 1 Crore or 29.12% if the total income exceeds Rs. 10  Crore.

(ii)  In any other case
Effective rate of tax including surcharge as applicable and H&EC 31.2%  if total income does not exceed Rs. 1 Crore, 33.38% if the total income exceeds Rs. 1 Crore or 34.944% if the total income exceeds Rs. 10 Crore

Note.—MAT as per the provisions of section 115JB shall be applicable @ 15% + Surcharge, @ 7% or 12%, as the case may be.

All the deductions and incentives which are hitherto available shall be allowed.

Option -3

Pay income tax as the provisions of Section 115BAA (see Option 1 of para (A) above)

See also  Conditions for Applicability of Sections 11 and 12 in case of Public Trusts for Charitable and Religious purposes
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