Unlike in sole proprietorship, as per the Companies Act, 2013, One Person Company has a separate legal entity from its owner. Being a separate entity the income of the company is taxable like other business entity.
The new concept of OPC does not find in the existing Income Tax Act, 1961. To solve the taxation issue of the company, OPC is covered under the same bracket of the private company. In that case the earning of the OPC taxable subject to the same rate of tax which is 30% plus 3% cess plus 5% surcharge, if applicable. When it comes to taxation aspect OPC would be disadvantageous as compared to the sole proprietorship.
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