- By ADMIN
- Posted 22 Jul, 2020
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Pick and Choose your Corporate Income-Tax Rate
This article is an attempt to explain the corporate tax rate applicable for the AY 2020-21 in a lucid manner. In order to identify the applicable income-tax rates for the corporates/companies for the AY 2020-21 (FY 2019-20), it is to be understood that there are three different set of rates available like a buffet. One must understand the general and special corporate tax rates available for the year.
General Corporate Tax rate
For Domestic Company with turnover or gross receipts of more than INR 400 Crore in PY 2017-18 (AY 2018-19) Tax Rate is 30%. On the contrary it is 25% for Domestic Company with a turnover or gross receipt of less than INR 400 Crores in the PY 2017-18 (AY 2018-19). For foreign companys the Applicable tax rate is 40% without any Turnover limits. The tax payer should also consider applicable surcharge and cess.
Special Corporate Tax Rate (option to be exercised)
Special rates are introduced in the CHAPTER XII - Determination of tax in certain special cases of the Income-tax Act, 1961 as amended by Finance Act, 2020. To understand better, the category of companies are to be bifurcated into manufacturing and other than manufacturing companies in this regard.
All these special rates are applicable only to domestic companies i.e. An Indian company, or any other company which, in respect of its income liable to tax under this Act, has made the prescribed arrangements for the declaration and payment, within India, of the dividends (including dividends on preference shares) payable out of such income.
| Attribute | Section 115BA | Section 115BAA | Section 115BAB |
|---|---|---|---|
| Applicability | Domestic Company must have incorporated on or after 01-04-2017. | Existing Domestic Companies | Newly Established Domestic Manufacturing Companies (on or after 01-10-2019) |
| Eligible Business | Manufacturing of Article or thing or research on such article or thing | Any Business | Manufacturing of Article or thing or research on such article or thing |
| Tax Rate | 25% on total income | 22% on total income |
15% - On total income from business of manufacturing of article or thing or research on such article or thing covered under Section 115BAB. 22% - On total income from business of manufacturing of article or thing or research on such article or thing not covered under Section 115BAB and on Short Term Capital Gain. 30% - if the income assessed by the Assessing Officer 22% - Failure to comply with certain specified conditions and opt exercise the option under section 115 BAA, if applicable.
|
| Form to exercise Option | Form No. 10-IB | Form No. 10-IC | Form No. 10-ID |
| Time Limit to excersie option | On or before due date u/s 139(1) | On or before due date u/s 139(1) | On or before due date u/s 139(1) |
| Conditions |
|
|
|
| Consequences of failure to adhere the conditions |
If Company availed to adapt section 115BAA the option under this may be withdrawn Normal provisions applicable i.e. 25% or 30% as the case may be |
Normal provisions applicable i.e. 25% or 30% as the case may be |
If the noncompliance is related to usage of used plant & machinery or building (in certain cases) or engaged in business other than Manufacturing of Article or thing or research on such article or thing
Option to exercise Section 115BAA.
In any other case normal provisions will apply i.e. 25% or 30% as the case may be |
| MAT |
Applicable @ 15% (AY 2020-21) |
Not Applicable |
Applicable @ 15% (AY 2020-21) |
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