Taxation of Companies: Group Members: Akanksha Gupta Lakshmikant Patnaik Khushboo Goel Pulkit Sachdeva

TAXATION OF COMPANIES
Group members:
Akanksha Gupta
LakshmiKant Patnaik
Khushboo Goel
Pulkit Sachdeva
WHAT IS A COMPANY?
A company has been defined as a
juristic person having an
independent and separate legal
entity from its shareholders.
WHAT IS A COMPANY?
As per section 2(17) of Income Tax Act, company means:

Any Indian company; or
Any body incorporated by or under the laws of a country
outside India; or
Any institution, association or body which was assessed as
a company for any assessment year under the Income-tax
Act, 1922 or was assessed under this act for any
assessment year as a company commencing on or before
01.04.1970
Any institution, association or body, whether incorporated
or not and whether Indian or Non-Indian, which is declared
by a general or special order of CBDT to be a company
COMPANY
A company in which the public are substantially interested u/s
2(18)
A company owned by Government or Reserve Bank of
India
A company having Govt. participation.
Companies registered under sec 25 of the Indian
Companies Act, 1956
A company declared by the CBDT
Mutual benefit finance company
TYPES OF COMPANY
1. Widely held company Its a company in which
the public are substantially interested.
2. Closely held company Its a company in which
the public are not substantially interested
3. Indian company u/s 2(26) means a company
formed and regd. under the Companies Act, 1956.
It shall be registered or, as the case may be,
principal office of the company, corporation,
institution, association or body, in all cases is in
India
TYPES OF COMPANY
4. Domestic Company u/s 2(22A) means an Indian Company or
any other company which in respect of its income, liable to tax
under
the
Income-tax
Act,
has
made
the
prescribed
arrangements for the declaration and payment within India

payable out of such Income.
5. Foreign company u/s 2(23A) A company which is not a

domestic company.
TYPES OF COMPANY
6. Investment company means a company
whose GTI mainly consists of Income
chargeable
under
the
heads
House
Property, Capital Gains, and other sources.
RESIDENTIAL STATUS OF
COMPANIES
Resident
An Indian Company
The control and

management of its
affairs is situated
wholly in India
Non Resident
Not an Indian
Company
The control and
management of its
affairs is situated
partially or wholly
outside India
INCIDENCE OF TAX
Covered u/s 5 of Income-tax Act
In case of Company Resident in India
Any income received or deemed to be received in India
during the relevant previous year by or on behalf of such
person
Any income which accrues or arises or is deemed to
accrue or arise in India during the relevant previous year
Any income which accrues or arises outside India

during the relevant previous year
INCIDENCE OF TAX
In case of Company Non-Resident
Any income which is received or is
deemed to be received in India during
the relevant previous year by or on
behalf of such person
Any income which accrues or arises or is
deemed to accrue or arise to him in
India during the relevant previous year
COMPUTATION OF TOTAL
INCOME
Calculate
income under
four heads
(Salary head to
be excluded)
Section 60 and
61, and set off
and carry
forward of
losses
applicable to
calculate GTI.
Subtract
deductions to be
allowed from
GTI to arrive at
Total Income
DEDUCTIONS
NO.
SECTIO
N
EXPLANATION
80G
DONATIONS TO CERTAIN FUNDS/CHARITABLE

INSTITUIONS, ETC.
80GGA
CERTAIN DONATIONS FOR SCIENTIFIC RESEARCH

OR RURAL DEVELOPMENT
80GGB
CONTRIBUTIONS GIVEN BY COMPANIES TO

POLITICAL PARTIES
80IA
PROFITS AND GAINS OF NEW INDUSTRIAL

UNDERTAKINGS OR ENTERPRISES ENGAGED IN
INFRASTRUCTURAL DEVELOPMENT,ETC.
80IAB
DEDUCTIONS IN RESPECT OF PROFITS AND GAINS

BY AN UNDERTAKING OR ENTERPRISE ENGAGED IN
DEVELOPMENT OF SPECIAL ECONOMIC ZONE
80IB
PROFITS GAINS FROM CERTAIN INDUSTRIAL

UNDERTAKING OTHER THAN INFRASTRUCTURE
DEVELOPMENT UNDERTAKINGS
DEDUCTIONS
NO.
SECTIO
N
EXPLANATION
80IC
DEDUCTIONS IN RESPECT OF CERTAIN

UNDERTAKINGS OR ENTERPRISES IN CERTAIN
SPECIAL CATEGORY STATES
80ID

FROM HOTELS AND CONVENTION CENTRES IN
SPECIFIED AREA
80IE
SPECIAL PROVISIONS IN RESPECT OF CERTAIN

UNDERTAKINGS IN NORTH-EASTERN STATES
10
80JJA

FROM BUSINESS OF COLLECTING AND
PROCESSING BIO-DEGRAGDEABLE WASTE
11
80LA
DEDUCTIONS IN RESPECT OF CERTAIN INCOMES OF

OFFSHORE BANKING UNITS AND INTERNATIONAL
FINANCE SERVICES CENTRE
12
80JJAA
DEDUCTION IN RESPECT OF EMPLOYMENT OF NEW
TAX RATES
Short-term capital gain on equity shares in a company
or units of an equity oriented fund where the
transaction is chargeable to securities transaction tax
15%
Tax on long-term capital gains
20%
Tax on winnings from lotteries, cross word puzzles,

races including horse races, etc.
30%
Tax on income by way of dividends declared,

distributed or paid by a specified foreign company
15%
Tax on any other income

Domestic Company
Foreign Company
30%
40%
Surcharge in case total income exceeds Rs 10 crores

Domestic Company
Foreign Company
10%
5%
Education cess
2% on Tax
Senior and Higher education cess
1% on Tax
MINIMUM ALTERNATE TAX

Tax payable for any assessment year cannot be less
than 18.5% of book value:
In case of company, the income tax payable on total
income is computed under the Income Tax Act, in
respect of PY relevant to AY or is less than 18.5% of its
book profit, such book profit shall be deemed to be the
total income of the assessee and the tax payable by
the assessee on such total income (book profit) shall be
the amount of the income tax at the rate of 18.5%.
SPECIAL PROVISION
Section 115JAA provides that where any amount of
tax is paid under section 115JB(1) by a company for
any AY shall be computed as under
MAT credit available = Tax paid u/s115JB Tax Payable
on the total income under normal provisions of the
act.
The amount of credit so determined shall be allowed to
carried forward and set of in a year when the taxes
become payable on the total income computed
under the regular provisions.
Illustration:
Suppose the book profit of a company
for
the
AY
2014-15
are
10,00,000
whereas
its
total
income
(including
STCG of 1,60,000 referred to in section

111A) as per provisions of Income Tax
Act is 4,00,000. The tax shall be payable
as under:
(1)Tax on total income as per provision of the Act

tax on STCG referred to in section 111A
1,60,000 @ 15%
24000
Tax on balance total income
2,40,000 @ 30%
72000
Total tax
96000
(2) Tax @ 18.5% on book profit

of 10,00,000
1,85,000
In the above case tax payable on total income

i.e. 96,000 is less than 18.5% of the book
profits i.e. 1,85,000. Hence in this case,
deemed total income shall be 10,00,000 and
the tax payable shall be:
Tax payable
1,85,000
Add: Surcharge
NIL*
Add: Edu. Cess and SHEC @ 3%
5,550
Total tax payable
1,90,500
* Surcharge is charged only when total income of

the company exceeds 10 crores.

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TAXATION OF COMPANIES

As per section 2(17) of Income Tax Act, company means:

arrangements for the declaration and payment within India

5. Foreign company u/s 2(23A) A company which is not a

Property, Capital Gains, and other sources.

The control and

Any income which accrues or arises outside India

DONATIONS TO CERTAIN FUNDS/CHARITABLE

CERTAIN DONATIONS FOR SCIENTIFIC RESEARCH

CONTRIBUTIONS GIVEN BY COMPANIES TO

PROFITS AND GAINS OF NEW INDUSTRIAL

DEDUCTIONS IN RESPECT OF PROFITS AND GAINS

PROFITS GAINS FROM CERTAIN INDUSTRIAL

DEDUCTIONS IN RESPECT OF CERTAIN

DEDUCTIONS IN RESPECT OF PROFITS AND GAINS

SPECIAL PROVISIONS IN RESPECT OF CERTAIN

DEDUCTIONS IN RESPECT OF PROFITS AND GAINS

DEDUCTIONS IN RESPECT OF CERTAIN INCOMES OF

DEDUCTION IN RESPECT OF EMPLOYMENT OF NEW

Tax on long-term capital gains

Tax on winnings from lotteries, cross word puzzles,

Tax on income by way of dividends declared,

Tax on any other income

Surcharge in case total income exceeds Rs 10 crores

Senior and Higher education cess

MINIMUM ALTERNATE TAX

STCG of 1,60,000 referred to in section

(1)Tax on total income as per provision of the Act

(2) Tax @ 18.5% on book profit

In the above case tax payable on total income

Add: Edu. Cess and SHEC @ 3%

Total tax payable

* Surcharge is charged only when total income of

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