Corporate & LLP Income Tax Rates
Domestic Corporate & Limited Liability Partnership (LLP) Income tax is a tax which has to be paid by the corporations or organization on the profits generated by them. The tax is levied as a normal income tax which is charged on an individual.
The companies which are incorporated in India are considered to be domestic companies for tax purposes even if they are owned by foreign companies. This is a tax which has to be paid by the corporations or organization on the profits generated by them. The tax is levied as a normal income tax which is charged on an individual. The tax amount levied varies by the place where the company is located. Corporation is a business run by individuals who provide various products and facilities to a country. They provide them in the form of employment, manufacturing various products and thereby enhancing the growth of a country. They are required to pay taxes to the government like any individual who pays income tax. They are charged differently than other businesses.
If a person’s business is not incorporated then the profits which the individual gets are taxed on his personal income tax. So the company which he owns should be incorporated in order to avoid the taxation on his personal income.
A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liability. It therefore exhibits elements of partnerships and corporations.Limited liability partnerships (LLP’) were introduced in 2001 and offer a cross between a partnership and company structure. They were mainly introduced to offer large professional firms that trade as partnerships (accountants, lawyers, surveyors etc) the opportunity to benefit from limited liability, just as a company can.
Although in general law an LLP is regarded as a ‘body corporate’ and is like a company, for tax purposes an LLP is normally treated as a ‘partnership’. Therefore an LLP will normally be regarded as transparent for tax purposes and each member/partner will be assessed to tax on their share of the LLP’s income or gains as if they were members of a ‘normal’ partnership. Therefore if an LLP carries on a trade, each registered partner is taxable on the income they derive from the LLP as trading income. A member of an LLP is however taxed on his or her share of the profits that are generated by the partnership.
The rates of Domestic Corporate & LLP:
|Domestic Corporate & LLP Income Tax Rates
|Twin Sharing basis per head
|Domestic Corporations/Private Limited Companies
|Domestic Corporations/Public Limited Companies
|Limited Liability Partnership (LLp’s)
1. A surcharge of 10% of the income tax is levied, if the taxable income exceeds Rs. 1 million. Educational cess is also added.
2. An Educational Cess is added to the basic tax rates. Surcharge is not applicable to LLP. Unlike LLP’s in the USA where they are pass-through entities for tax purposes, in case of LLP’s in India, they are partially pass-through entities for tax purposes. In India tax an LLP is required to pay income tax on 40% of its income; since an LLP is allowed to pay the balance of 60% as remunerations to it partners. Partners of an LLP are required to pay tax on the amount paid to them. Besides, LLP’s are not required to pay dividend distribution tax or Minimum Alternate Tax (MAT).
3. All companies incorporated in India are deemed as domestic Indian companies for tax purposes, even if owned by foreign companies.