Corporate tax is one of the most common taxes you will ever come across as a business owner. 

This tax is paid by companies on their taxable profit. Corporate tax is a huge part of doing business, especially for big corporations that must pay crores in taxes. 

It is very important to understand the ins and outs of corporate tax ans about Corporate tax services. 

From tax input to payment deadlines, how you handle corporate tax can substantially impact your business.  

What is corporate tax?

A tax levied against a corporation's earnings is known as corporate tax. It is a type of taxation that only pertains to companies with a corporate structure. 

The tax is determined using the corporation's taxable revenue, which is equal to its profits, less any permitted deductions and exemptions. 

Different tax rates apply depending on the nation and region in which the company conducts business. 

For instance, the tax rate in India for companies with a turnover of fewer than 250 crores is 25%. Additionally, some states set their business tax rates. 

In India, tax returns must be submitted on or before 31st October. For businesses that require more time to submit, extensions are offered. 

Additionally, corporations may be qualified for several credits and deductions that can reduce their tax obligations. 

These consist of credits for items like research and development as well as deductions for costs like wages, rent, and supplies. 

To maximize their earnings, corporations must carefully manage their tax liabilities with the help of Corporate Tax Services near me. 

This could entail employing techniques to reduce taxable revenue as well as collaborating with tax experts to guarantee that all permitted deductions and credits are claimed. 

Corporations liable to pay tax under India are:

• Indian companies with legal status. 
• Corporations that obtain money from India and conduct business using that income. 
• Additional international businesses that have a long-term presence in India. 
• Corporations that have only obtained the status of Indian residents for tax-paying purposes. 

Corporate tax rates in India

Several factors determine how much tax a corporation must pay. It is important to look at and understand those factors before we move on to the actual tax rates. 

The factors, along with the different tax rates, are listed below, also you can save your tax by hiring the especia’s Corporate Tax Services experts.

1. COMPANY TYPE

The sort of company will determine the corporate tax rate in India. For instance, domestic businesses pay a lower tax rate than those from other countries.

Domestic Corporations: A domestic corporation is a business founded in India and incorporated under the 2013 Companies Act of India. 

If the Indian arm's management and control are entirely located in India, even a foreign company can be regarded as a domestic corporate entity. 

Foreign Corporations: A company that is located outside of India and not in India is referred to as a foreign corporation. 

Once more, a business is referred to as foreign if some of its management and control is located outside of India. 

This distinction is crucial because domestic Indian companies must pay corporate tax on their overall income, whereas foreign corporations only pay tax on the income they produce in India. 

2. INCOME 

A significant factor in determining a company's corporate tax is the quantity of income it generates. Companies that earn more money typically must pay more taxes. 

3. Calculation of Net income 

To calculate a company's tax liability, we calculate its net taxable income first. The company will have to pay taxes depending on this net income. 

A company's remaining funds after deducting all necessary costs are known as its net income or net revenue. 

A business must pay a variety of costs when it sells products. The following are these costs:  

• Depreciation. 
• Cost of goods sold. 
• Selling expenses. 
• Expenses spent on office operations. 
• A company's total income includes net business profit, rent, capital gains, and revenue from other sources like interest or dividends. 

Net Revenue = Gross Revenue – (Expenses + Depreciation)    

4. DEDUCTIONS

In India, businesses are permitted to use several exemptions and deductions when determining their taxable revenue. 

These consist of exemptions from paying taxes on certain types of revenue as well as deductions for costs like rent, interest payments, and salary deductions. 

Some commonly availed deductions have been listed below. 

• Capital gains may be subject to a flat tax of 15% or 20% or be excluded from taxation under Sections 54D, 54G, 54GA, 54EC, etc. 
•  Donations to charitable groups are subject to conditions and may be eligible for a 50% to 100% tax exemption under Section 80G. 
•  Dividends, which in some circumstances may be subject to refunds. 
•  Deductions for depreciation under Section 32 permit a 15% deduction for the cost of old assets like machinery and an additional 20% deduction on the purchase of new assets in the manufacturing or production of any item or thing in the business of transmitting, generating, or distributing power. 
• Deduction related to the hiring of a new employee 
• Businesses are allowed to deduct various costs, including rent, utilities, and workplace supplies. 
• Companies are entitled to a deduction for costs associated with launching a company. 

5. INCENTIVES 

The Indian government provides businesses working in some industries or regions with a variety of tax incentives. 

These rewards may consist of reduced tax rates or tax exemptions. Some commonly used deductions are: 

• Incentives under special economic zones 
• reduction in the amount of excise and customs taxes due on shipments made domestically. 
• A tax break for developers of Special economic zones. 
• Exemption from taxes for SEZ-based offshore banking entities. 
• exemption from MAT (minimum alternative tax) 

6. Incentives for startups in India 

• Any startup that was incorporated after April 1, 2016, is eligible for a three-year, 100 percent tax rebate on earnings within a ten-year block. However, the tax rebate is not valid if the company's yearly revenue surpasses INR 1 billion. 
• There is no long-term capital gains tax applicable to these companies. However, this is only valid if the invested capital gains are a portion of the fund that the central government has informed of within a total of six months of the asset's actual transfer date. 

7. Corporate tax service charges

Some new tax rates that the ministry has introduced for certain companies are also listed below:

8. Dividend Distribution Tax 

 Dividend Distribution Tax (DDT) is levied on the profits distributed through this process. 

A dividend is the distribution of profits to shareholders of a business. Contrarily, Corporation Tax is a tax that is calculated on a company's net profit after deducting its costs. 

As a result, the corporate entity must pay dividend distribution tax on the dividends it offers to its shareholders. 

Consequently, higher dividends result in a higher tax burden. It may also be referred to as the percentage of dividends a specific corporation pays its shareholders. 

9. TAX PLANNING

Every taxpayer, including businesses, needs to do some tax planning so they can maximize their earnings while paying less in taxes. Corporate tax planning entails creating a plan to accomplish this, so the businesses employ experts who are familiar with all the rules and guidelines about the laws governing tax payments. Companies can lawfully lower the amount of taxes they owe and keep more of their earnings in their pockets by utilizing the legal deductions, exemptions, and credits available to them. 

The fact is that business tax planning involves more than just lowering taxes. Additionally, it's about raising earnings. Companies can increase their bottom line and reinvest in their company by carefully managing their tax liability. 

Big corporations have entire teams dedicated to figuring out how the company can legally pay fewer taxes. 

For small businesses, it is very important to minimize expenses. That is why it becomes important to know about all the incentives and deductions the government has laid out.  

Hiring professional Corporate Tax Services to help you with some financial planning is never a bad idea. More often than not, the effects are noticeable immediately.  

Some common tax planning methods

• Benefit from tax deductions and benefits- Make sure you are conscious of all the tax benefits that are accessible to your business and utilize them to reduce your overall tax burden. 
• Invest in tax-deferred funds- To delay taxes and gradually increase your wealth, think about investing some of your company's earnings in tax-deferred retirement accounts like a 401(k) or IRA. 
• Keep accurate documents- You can maximize your deductions and reduce your tax liability by keeping thorough documents of your business's costs and revenues. 
• Incorporate in a jurisdiction with favourable tax laws- Think about forming your business in a state like Nevada or Wyoming that offers cheap corporate tax rates or other tax benefits. 
• Plan out your strategy- Taxes are a situation where timing is everything. To minimize your tax liability, think about delaying revenue or speeding up expenses. 
• Cooperate with a financial expert- You can find even more ways to save money and manage the complicated world of business taxes with the assistance of an experienced tax professional. 

Also check,

Corporate Tax Compliance Services

Income tax return Services

Income Tax valuation Consultants

Our areas of expertise in corporate tax include

1. Accountancy for tax filing
2. Corporate Tax Compliance Services
3. Tax strategy for businesses
4. support for corporate audits
5. Investigation of corporate issues and tax disputes
6. Planning for international taxes for foreign entities

Reach out to us at accounts@especia.co.in if you're looking for the best corporate tax solutions company and take advantage of the best corporate tax services from our team of professionals.    

WHY ESPECIA For Corporate Tax Services

Especia employs the best tax professionals that will be with you throughout the process. 

From tax planning to filing those taxes, you will get a seamless experience. Especia works on the principle of transparency, and you will be aware of any steps taken.