Company Tax Rate in India

Company Income Tax Rate – AY2019-20

Company Income Tax Rate – Assessment Year 2019-20

Companies are the most prevalent and popular form of legal entity for doing business in India. Each year nearly a lakh companies are incorporated in India and the process for incorporation of a company has been made simpler. All companies registered in India are required to file an income tax return on or before 30th September of each year for the financial year ended 31st March. The income tax return of a company must be audited by a practising Chartered Accountant and file using form ITR-6. In this article, we look at the company income tax rate in India.

Income of a Company

Income tax is levied on the total income of the company computed as per the Income Tax Act. Total income of a company is closely related to the profit of the company. Total income is not related to the turnover or sales revenue of a company. Hence, the applicability of income tax would be relevant exclusively if the company has profits. A company would not be required to pay income tax, if total income or profit is negative i.e., the company has incurred losses during a year. In case of loss, the loss can be carried forward to set off against future profits.

Financial Year vs Assessment Year

Most companies in India adopt a financial year that runs from 1st April to 31st March. Assessment year begins at the end of the financial year and would deal with the financial year that just ended. For example, the financial year 2017 – 18 pertains to 1st April 2017 to 31st March 2018 and assessment year 2018-19 would start from 1st April 2018 and end on 31st March 2019. In the assessment year 2018-19, the income tax return of the company pertaining to the financial year 2017-18 would be filed.

ITR-6 Form

The income tax return of a company must be filed in Form ITR-6. ITR-6 can be filed online using digital signature and the return must be audited, irrespective of turnover or profits.

Company Tax Rate FY2017-18 | AY2018-19

In the 2015 Budget, the Hon’ble Finance Minister announced that corporate tax rate would be reduced to 25%. Accordingly, private limited company tax rate has been fixed at 25% and 30%.

  • Private limited company with a total turnover of upto Rs.50 crores during the previous year are taxed at 25% of total income.
  • Private limited company with a total turnover of more than Rs.50 crores during the previous year are taxed at 30% of total income.

In addition to income tax, a private limited company is also liable to pay income tax surcharge, education cess and secondary and higher education cess.

Income Tax Surcharge

Income tax surcharge is applicable only for companies having a total income of more than Rs.1 crore. For example, if a private limited company has total income of Rs.1 crore to Rs.10 crore, surcharge at the rate of 7% would be applicable on the income tax payable.

In case of companies having total income of more than Rs.10 crores, a 12% surcharge would be applicable on the income tax payable.

Cap on Income Tax Surcharge for Companies

Income tax surcharge is capped. For a company having a total income exceeding Rs.1 crore but not exceeding Rs.10 crores, the total amount payable as income-tax and surcharge would not exceed the total amount payable as income-tax on a total income of Rs.1 crore by more than the amount of income that exceeds Rs.1 crore.

Also for a company having a total income of more than Rs.10 crores, the total amount payable as income-tax and surcharge would not exceed the total amount payable as income-tax and surcharge on a total income of Rs.10 crores by more than the amount of income that exceeds Rs.10 crores.

Education Cess

Companies are liable to pay education cess at the rate of 2% of the amount of income tax as increased by the applicable surcharge.

Secondary and Higher Education Cess for Company

Companies are liable to pay secondary and higher education cess at the rate of 1% of the amount of income tax as increased by the applicable surcharge.

Know more about FY2017-18 company tax rates.

Company Tax Rate FY2018-19 | AY2019-20

The following income tax rates are applicable for domestic companies in India. The amount of income tax payable would vary based on the gross turnover of the company as below:

Turnover DetailsTax Rate
Gross turnover upto 250 Cr. in the previous year25%
Gross turnover exceeding 250 Cr. in the previous year30%

Surcharge

The income tax computed in accordance with above rates, and after being reduced by the amount of tax rebate will be increased by a surcharge.

  • Taxable Income exceeding ₹ 1 Crore –  7% of computed income tax.

(However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.)

  • Taxable Income exceeding ₹ 10 Crores – 12% of computed income tax.

(However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 10 crores by more than the amount of increase in taxable income.)

Health & Education Cess

For the financial year 2018-19, a Health and Education Cess computed at 4% of the total of income tax and surcharge will be applicable.

Minimum Alternate Tax for Company

Minimum alternate tax is applicable for a company when the normal tax liability of the company is less than 18.5% of book profit.

Know more about company tax return filing and due date for filing income tax return by getting in touch with an IndiaFilings Advisor. To file a company tax return, visit IndiaFilings.

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