Starting a business as a private limited company has advantages including limited liability and credibility; but, it also means following tax laws. Understanding LTD company tax is crucial whether you intend to launch a private limited company in India or run one already. We shall simplify LTD company tax for Indian business owners in this blog.
LTD Company: What is it?
Registration under the Companies Act, 2013 results in an LTD company, sometimes known as a private limited company. It comprises:
- Different legal identity from its proprietors
- Restricted liability among shareholders
- Compliance policies and a board of directors
What is LTD Company Tax?
LTD company tax is the corporate tax due by a private limited company on its earnings. It contains:
- Income tax applied to company profits
- Surcharge and cess if relevant.
- Additional indirect taxes including GST, should one be registered
LTD Company Tax Rates in India (FY 2024–25)
1. Domestic Company with Turnover Up to ₹400 crore
- Tax rate: 25%
- Cess of Health and Education: 4%
- The effective rate is 26%.
2. Home business choosing Section 115BAA (no deductions or exemptions)
- Tax percentage: 22%
- Cess is 4%.
- Effective percentage: 22.88%
👐 Companies that don’t claim deductions under 80IA, 10AA, etc. find this lower rate appealing.
Under Section 115BAB, New Manufacturing Companies
- Taxes rate: 15%.
- With cess: 17.16%
- Just for businesses registered either on or after October 1, 2019
Extra Surcharge (should it be necessary)
- Income higher than ₹1 crore: 7% tax
- Income beyond ₹10 crore: 12% surcharge
- Income tax determines the surcharge; total income does not determine this.
Other Taxes and LTD Company Compliance
Apart from LTD company tax, these are also rather important:
- MAT, minimum alternate tax: 15% on book income, unless choosing 115BAA or 115BAB
- TDS, or Tax Deducted at Source: On wages, vendor, contractor, etc. payments
- GST: Registration is required should turnover be more than ₹20/40 lakh.
- Tax audit: Should turnover exceed ₹1 crore (or ₹10 crore for digital transactions, audit is called for).
- Advance tax: Pay four instills annually if your tax liability exceeds ₹10,000.
- Income tax returns were filed using Filing and Compliance Form ITR-6.
Due day:
- October 31st (should an audit be called for)
- September 30th, if not under audit
- Audit report: Should applicable, must be turned in with ITR.
Corporate law mandates books of accounts and ROC filings.
Advice for Handling LTD Company Tax
- Hire a qualified CA or tax advisor
- Record your income, expenses, and payments consistently.
- Don’t forget advance tax deadlines.
- On time file returns help to avoid penalties.
- Check whether your business would benefit from using either 22% or 15% tax rates.
Last thoughts
Operating a seamless business in India depends on knowing LTD company tax. Good planning will help you stay compliant, lower your tax load, and stay out of legal hot ground. Whether you run a company now or are just starting it, keep on top of your tax obligations; they are just as crucial as profitability.
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