Aspects of Corporate Taxation in India

Corporate taxes are annual taxes chargeable on the income of a corporate body operating in India. Company, whether Indian or foreign, public or private is liable for taxation.
All companies formed and registered in India are considered as domestic companies, whereas, a foreign company is a company whose control and management is situated completely outside India. In case of domestic company, tax is levied on all the global earnings, which include income from all sources, amount of dividend declared, distributed or paid, etc., however foreign companies do not need to make the prescribed arrangements for declaration and payment of dividends within India.

Rate of Tax Domestic companies are subject to corporate tax in India. They are charged at the rate of 30 per cent of their total earnings, while international business organisations working in India are normally liable at the tax rate of 40 per cent. Tax rate for foreign companies is 50 per cent for any royalty income received from the Government or any fees received for rendering technical services under an agreement approved by the Central Government.
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Surcharge Companies with a turnover of Rs. 1 crore or more are subject to a surcharge levied on the total taxes paid by them. The domestic companies and foreign companies are chargeable at the rate of 5 per cent and 2 per cent respectively.

Educational cess An additional educational cess is levied at the rate of 3 per cent on the amount of tax, inclusive of surcharge, in all cases. It includes -Education Cess on Income Tax- and -Secondary and Higher Education Cess on Income Tax- at the rate of 2 per cent and 1 per cent respectively.

Various deductions and rebates allowed in Corporate Taxation
Special rebate is given for developing and operating new infrastructure and power facilities
Deductions are allowed on exports and new undertakings subject to certain conditions
Capital allowances like expenses on research and development (R&D), mergers & acquisitions (M&As) qualify for deduction
Valuation of inventory is done at market value or cost whichever is lower
Special provisions for venture capital companies are given
Business losses can be carried over for eight years
Deductions are permitted on interest paid on the borrowings
These tax laws, rules, and rates vary from country to country. Indian income tax laws have various rules and regulations, and are amended from time to time. Hence, understanding these laws has become more complex, and one might eventually end up paying more taxes.
There are various corporate law firms in India, which provide optimal tax solutions to their clients in a cost-effective manner on the basis of experience gained by them in dealing with a multitude of clients. These law firms provide legal assistance in many cases related to taxation like filing of income tax returns, foreign tax advice, and various provisions related to capital gains, TDS, etc. They are committed to provide innovative legal solutions to its domestic as well as international clients.

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