As compared to Individuals, corporates have received a major overhaul of the tax laws under new regime of taxation. There are different laws for new manufacturing and non-manufacturing concerns. If you are planning to set-up a new manufacturing unit then this article might be helpful for you as well as compared other corporates. Let us understand tax rates applicable on corporates.
Tax rates under old regime
| Domestic Company | Foreign Company | ||
| If turnover/gross receipts in PY 2021-2022 <= 400Cr | 25% | Flat rate of 35% | |
| Others | 30% | ||
| Surcharge | Surcharge | ||
| Total Income | Rate of Surcharge | Total Income | Rate of Surcharge |
| >1Cr to 10Cr | 7% | >1Cr to 10Cr | 2% |
| >10Cr | 12% | >10Cr | 5% |
| Unlike individuals, no benefit of Rs.2.5L | |||
Tax rates for normal companies apart from manufacturing units
| Sec 115BAA – Domestic Company | |||
| Rate of tax | 22% + 10% surcharge + 4% cess (surcharge and cess are always added) | ||
| Other income | |||
| 111A | 15% + 10% + 4% | 112 | 20% + 10% + 4% |
| House property | 22% + 10% + 4% | 112A | 10% + 10% + 4% |
| Other sources | 22% + 10% + 4% | ||
| Deductions disallowed – 32(1)(iia), 33AB, 33ABA, 35(1)(ii), 35(1)(iia), 35(1)(iii), 35(2AA), 35(2AB), 35AD, 35CCC, 35CCD, Ch VI-A, 10AA | |||
| Deductions allowed – 80JJAA, 80LA, 80M | |||
| Other points
1. MAT credit cannot be adjusted. It will get lapse if Company opted this section. 2. Brought forward losses and unabsorbed depreciation pertaining to above disallowances are not allowed to be carried forward. 3. Form 10-IC is mandatory to be filed upto due date of ITR u.s. 139(1). 4. Once exercised, it cannot be withdrawn. 5. If conditions not satisfied, normal regime would apply. |
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Tax rates for manufacturing units
| Sec 115BAB – Domestic Manufacturing Company | |||
| Eligibility | Company set up on or after 01/04/2019 and manufacturing starts upto 31/03/2024. | ||
| Should not be formed by splitting or reconstruction of existing business.
New P&M (upto 20% of total P&M can be old and imported P&M is treated as new. Building should not be used as hotel or convention center earlier. Not engaged in any other business (power generation is allowed business). |
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| Rate of tax | 15% + 10% surcharge + 4% cess (surcharge and cess are always added) | ||
| Other income | |||
| 111A | 15% + 10% + 4% | 112 | 20% + 10% + 4% |
| House property | 22% + 10% + 4% | 112A | 10% + 10% + 4% |
| Other sources | 22% + 10% + 4% | STCG – depreciable assets | 15% + 10% + 4% |
| Sec 24 and 57 not allowed from HP & IFOS | STCG – non-depreciable assets | 22% + 10% + 4% | |
| Excess profit computed by AO u.s. 115BAB(6) | 30% + 10% + 4% | ||
| Deductions disallowed – 32(1)(iia), 33AB, 33ABA, 35(1)(ii), 35(1)(iia), 35(1)(iii), 35(2AA), 35(2AB), 35AD, 35CCC, 35CCD, Ch VI-A, 10AA, 24, 57 | |||
| Deductions allowed – 80JJAA, 80M | |||
| Other points
1. MAT liability does not arise. MAT credit is not applicable as the Company is newly setup. 2. Brought forward losses and unabsorbed depreciation pertaining to above disallowances are not allowed to be carried forward. 3. Form 10-ID is mandatory to be filed upto due date of ITR u.s. 139(1). 4. Once exercised, it cannot be withdrawn. 5. If conditions not satisfied, normal regime would apply. But if condition in eligibility 2. to 4. above breached then apply 115BAA. 6. 115BAB(6) – Pursuant to transaction between company and other person is taking place at profit higher than ordinarily expected, AO may tax higher profit at 30%. |
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