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    Computation of Tax Liability of Company

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    Vicky D
    This document outlines the tax liability computation for companies in India for the 2020-21 assessment year. It discusses the tax rates for short-term capital gains, long-term capital gains, and other income. It also covers surcharge rates, health and education cess, minimum alternative tax, and tax credit carry forwards. Recent changes introduced in the 2019 Finance Act that allow new domestic manufacturing companies the option of a 15% tax rate and existing domestic companies the option of a 22% tax rate are also summarized.

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    Computation of Tax Liability of Company

    Uploaded by

    Vicky D
    20 views8 pages
    This document outlines the tax liability computation for companies in India for the 2020-21 assessment year. It discusses the tax rates for short-term capital gains, long-term capital gains, and other income. It also covers surcharge rates, health and education cess, minimum alternative tax, and tax credit carry forwards. Recent changes introduced in the 2019 Finance Act that allow new domestic manufacturing companies the option of a 15% tax rate and existing domestic companies the option of a 22% tax rate are also summarized.

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    This document outlines the tax liability computation for companies in India for the 2020-21 assessment year. It discusses the tax rates for short-term capital gains, long-term capital gains, and other income. It also covers surcharge rates, health and education cess, minimum alternative tax, and tax credit carry forwards. Recent changes introduced in the 2019 Finance Act that allow new domestic manufacturing companies the option of a 15% tax rate and existing domestic companies the option of a 22% tax rate are also summarized.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    20 views8 pages

    Computation of Tax Liability of Company

    Uploaded by

    Vicky D
    This document outlines the tax liability computation for companies in India for the 2020-21 assessment year. It discusses the tax rates for short-term capital gains, long-term capital gains, and other income. It also covers surcharge rates, health and education cess, minimum alternative tax, and tax credit carry forwards. Recent changes introduced in the 2019 Finance Act that allow new domestic manufacturing companies the option of a 15% tax rate and existing domestic companies the option of a 22% tax rate are also summarized.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 8

    COMPUTATION OF TAX

    LIABILITY OF COMPANY
    Rates of income tax for the A.Y. 2020-21(for company)
    1. Short term capital gains u/s 111A @15% ----
    2. Tax on Long term capital gains @ 20% -----
    3. Tax on any other income
    (a) Domestic company @ 30% -----
    (b) Foreign company
    (i) for all income other than given under (ii) below @40% ----
    (ii) In case of Royalty received from govt/Indian concern or technical fees
    as per agreement approved by government@ 50% ----
    Total -------
    Add: (i) Surcharge 7% or 12% in case of domestic companies and
    2% or 5% in case of foreign companies provided total income
    of such companies exceed 1crore or 10 crore. -------

    (ii) Health& Education cess 4% ----

    ______
    Net Tax Liability -------
    SEC. 115JB Minimum Alternative Tax (MAT)

    In case of company income tax shall payable shall be higher of the following
    two amounts:

    (1) Tax on total income computed as per the normal provisions of the Act
    charging at normal rates and special rates.

    (2) 18.5% of book profit .


    Sec. 115JAA Tax credit in respect of tax paid under MAT

    MAT credit available = Tax paid u/s 115JB – Tax payable on the total income under
    normal provisions of the Act.

    The amount of tax credit so determined shall be allowed to carried forward and set
    off in a year when the tax becomes payable on the income computed under the
    regular provisions. However, no carry farward shall be allowed beyond the 15th A.Y.
    immediately succeeding the A.Y. in which the tax credit becomes allowable.
    Finance (No. 2) Act, 2019
    • W.e.f FY 2019-20
    Domestic company an option to pay income tax
    @ 22%
    Condition- they will not avail any exemption or
    incentive
    - The effective rate of tax for these companies
    shall be 25.17% inclusive of surcharge &
    cess.
    - Such companies shall not be required to pay
    MAT
    • W.e.f FY 2019-20, any new domestic company
    incorporated on or after 1 st October 2019 making
    fresh investment in manufacturing an option to pay
    income tax @ 15%
    Condition- they will not avail any exemption or
    incentive and commences their production on or
    before 31st March, 2023
    - The effective rate of tax for these companies shall
    be 17.01% inclusive of surcharge & cess.
    - Such companies shall not be required to pay MAT
    • A company which do not opt for the
    concessional tax regime and avails tax
    exemption/ incentive shall continue to pay tax
    at the pre-amended rate.
    • However these companies can opt for the
    concessional tax regime after the expiry of
    their tax holiday/exemption period. After the
    exercise of the option they shall be liable to
    pay tax @ 22% and option once exercised
    cannot be subsequently withdrawn.
    • Further, in order to provide relief to companies which
    continue to avail exemptions/ incentives, the rate of MAT
    has been reduced from 18.5% to 15%.

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