Yes, section 2(17) of the Act defines a company. Its scope is much broader in the Income-tax Act than in the Companies Act. Under the Act, the expression ‘Company’ means:
Corporate Taxes are computed based on income grouped under various heads such as:
The tax shall be computed based on either of the following incomes:
The corporate income-tax rate(%) applicable for the financial year 2020-21 is as follows:
| Income | Domestic Company- If total turnover or gross receipts is upto INR 400 crores in the financial year 2018-19 | Other domestic companies | Foreign companies | |||
| Basic | Effective | Basic | Effective | Basic | Effective | |
| Upto INR 1 Crore | 25% | 26% | 30% | 31.20% | 40% | 41.6% |
| More than INR 1 Crore but upto 10 Crores | 25% | 27.82% | 30% | 33.384% | 40% | 42.432% |
| More than INR 10 crores | 25% | 29.12% | 30% | 34.944% | 40% | 43.68% |
The effective rate above includes surcharge, as applicable and health and education cess of 4%
The surcharge rates vary based on the turnover, which is as given below:
| Income | Domestic companies | Foreign companies |
|---|---|---|
| Upto INR 1 Crore | Nil | Nil |
| More than INR 1 Crore but upto 10 Crores | 7% | 2% |
| More than INR 10 crores | 12% | 5% |
Reduced taxes rates were introduced to encourage the companies to expand their operations, thereby providing the much-needed boost to the economy. Certain conditions are attached to such beneficial rates. Therefore, the companies have an option to pay tax at the reduced rates or the normal rates. The benefits and conditions are as follows:
A) Existing Companies: i) Tax Rate:
Effective rate: 25.168%
Basic: 22%
Surcharge: 10% (irrespective of the turnover)
Cess: 4%
ii) The companies should not claim the deduction of the following benefits otherwise available to them :
iii) Companies must exercise the option to pay tax@22% before the due date of filing return in Form 10-IC
iv) on electing to pay tax under this section, MAT and MAT credit shall not apply to such companies
i) Tax Rate
Effective rate: depends on turnover (refer to the third column of the first table)
Basic: 25%
Surcharge: based on the turnover
Cess: 4%
The company can exercise such an option if it fulfils all the following conditions:
a) Section 115BAB
i) Tax Rate
Effective rate: 17.16%
Basic: 15%
Surcharge: 10% (irrespective of the turnover)
Cess: 4%
However, the above tax rates are only for income from manufacturing businesses. Tax rates for other income are summarised below:
Summary of tax rates applicable for companies opting to pay tax under section 115BAB:
| Income | Tax Rate |
|---|---|
| Income from manufacturing | 15% |
| Income from non-manufacturing activity (If no specific rate is prescribed) | 22% |
| Short-term capital gain(STCG) on the transfer of depreciable assets | 15% |
| STCG on the transfer of non-depreciable assets | 22% |
| Excess profit computed by tax authority u/s 115BA(6) | 30% |
| Special tax rates for income under chapter XII | Special rates applicable |
ii) The company can exercise such an option if it fulfils all the following conditions:
Where the tax payable under the normal provisions (excluding surcharge and health and education cess) of the Act exceeds 15% of tax on adjusted book profits(except the income from life insurance business), then the companies shall be required to pay MAT on such book profits. Such excess tax paid is termed as MAT credit which can be carried forward and utilised for the next 15 years.
The MAT rate is 15% plus the surcharge based on the turnover and cess of 4%.
Note: MAT does not apply to:All the companies must file an income tax return by the due dates. The tax return forms to be filed by a company is ITR 6 or ITR 7 if it is a religious or charitable trust, political party, research association, news agency or similar organisations specified in the Act. Also, the companies must get their books of accounts audited and submit a tax audit report along with the return.
The due dates for filing such return and report are as under:
Liability to pay GST arises on the date of issue of invoice or on the date on which the supplier receives the payment with respect to the supply.
The date of receipt of payment is the date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account whichever is earlier.
In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at each time such statement is issued or at the time each payment is received.
The time of supply is the point when the liability to charge GST arises. GST Act provides separate times of supply for goods and services.
Yes, if an agreement exists between the wholesaler and retailer for periodic billing and periodic payments.
Yes, the supplier can reduce his tax liability by issuing a commercial credit note even if the recipient did not reverse the input tax credit claimed by him.
The time of supply would be the date on which the recipient shows the recipient of services in his books of accounts.
No. The supply shall be deemed to have been made to the extent it is covered by the invoice or the part payment.
Usually, the invoice is to be issued before or after the completion of supply. If issued after the supply of goods or services, it has to be done within 30 days from such supply.
