Corporate Taxation

Company as per IT Act

Definitions u/s.2(17)

Indian Company

Body corporate of foreign country

Institution, association or a body assessed as a company

Any institution, association or a body as declared by order of CBDT as company.

Definitions u/s.2(18)

A company in which public are substantially interested. It includes:

Government Company

Companies under RBI (Banking)

A company more than 40% shares are held by Government or RBI.

Companies Registered u/s.25 of the Companies Act.

A company declared by CBDT without share capital.

Mutual Benefit finance Company: Principal business is acceptance of deposit

from public.

A company in which at least 50% or more equity shares are held by co-operative
societies.

A public limited company

Its equity shares are listed to stock exchange;

Equity shares with 50% voting power held by Government, a statutory

corporation, a public company where public is substantially interested

Widely held company

Defined by Companies Act 1956 with two conditions:

Public are substantially interest

Closely held company

public are not substantially interested

Indian Company Sec2(26)

Company formed and registered under any law relating to companies act of --------.

Corporation established by central and state governments.

Institution, association or body declared by CBDT

Aforesaid cases are Indian Companies only it its registered office is India.

Foreign Company Sec2(23A)

A foreign co., is a co., which is neither an Indian co., nor has made the prescribed arrangements
for the declaration and payment of dividends within india.

Domestic Company Sec2(22A)

Indian Company

Any other company where its income is liable to tax under the Income Tax Act

Requirements to be satisfied:

Making arrangements for declaration and payment of dividends in India: Sec.194

a) Maintenance of share register at the place of business in India;
b) Passing of accounts at general meeting and declare dividend only at the meeting only in
India;
c) Dividend declared should be payable within India to all shareholders
Corporate Tax Rates
Incase of Domestic Co.,

Incase of Foreign Co.,

Domestic companies are taxable @ 30 percent

Foreign companies are taxable @ 40 percent

Special method for computation of total income of

insurance companies. The rate of tax on profits from
life insurance business is 12.5 percent
Surcharge is applicable @ 5 percent if total income is
in excess of INR 10,000,000. Marginal relief may be
available

Surcharge is applicable @ 2 percent if total income is

in excess of INR 10,000,000.Marginal relief may be
available

Education cess is applicable @ 3 percent on incometax (inclusive of surcharge, if any).

Education cess is applicable @ 3 percent on incometax (inclusive of surcharge, if any)

Minimum Alternate Tax

Minimum Alternate Tax (MAT) is levied @ 18.5 percent of the adjusted book profits in the case
of those companies where income-tax payable on the taxable income according to the normal
provisions of the Income-tax Act, 1961 (the Act), is less than 18 percent of the adjusted book
profits.

MAT credit is available for 10 years

Surcharge is applicable @ 5 percent in the case of domestic companies if the adjusted book
profits are in excess of INR 10,000,000. Marginal relief may be available

Education cess is applicable @ 3 percent on income-tax (inclusive of surcharge, if any).

Calculation of Book Profit

Particulars

Amount

Net Profit as per P/L a/c

Amount

XXXXXX

ADD:
1. Income tax paid/payable or payable

XXX

2. Amount transferred to any reserve

XXX

3. Provisions made for meeting liabilities other than ascertained

liability

XXX

4. Provisions for losses of subsidiary co.,

XXX

5. Dividend paid and Dividend Proposed

XXX

6. Expenditure related to income u/s 10,11 & 12 except expenses

XXX

related to Long term capital gains exempt U/s 10(38)

7. Amount of Depreciation

XXX

8. Deferred Tax and Provision thereof

XXX

XXXXXX

Less:
1. Amount withdrawn from any reserve or provision and credited to
P&L a/c

XXX

2. Exempted income U/s 10,11 &12 if credited to P&L a/c exempt LTCG
exempt U/s 10(38)

XXX

3. Brought forward loss or depreciation which ever is less As per books

of account

XXX

4. Profit of Sick industrial co.,

XXX

5. Amount of deferred tax if such amount is credited to the p&l a/c

6. Amount of Depreciation excluding depreciation on a/c of revaluation
of assets

XXX

7. Amount withdrawn from revaluation reserve and credited P&L a/c to

the Extent it does not exceed the depreciation on a/c of revaluation of
assets.

XXX

BOOK PROFITS

XXXXX

XXXXXXX