Other than individuals common and popular form of the legal entity doing business are companies incorporated in India. There were more than 13 lakh companies registered in India in the year 2014 as per MCA report. Hence it is essential for all private companies to Understand the taxability. This involves knowing where you can get tax exemptions and reduce the outflow of cash from the company.
Although the tax bracket for private limited companies is very high the tax structure for companies is far better than sole proprietorship and other companies model. The taxation for such companies is based on the individual tax slabs.
Most start-ups in India are registered as private limited companies, and hence they should be aware of the tax exemptions that are provided to all the eligible start-ups:
With the amendment in the income tax act, new sections are incorporated that provides for a special exemption in case of long term gains under the limitation provided by the central government of India.
The government to eligible start-ups provide a tax exemption on cases where investments are made by angel investors, family members or funds that are not provided by any registered venture capitalist.
Certain tax planning steps on the part of private limited company officials will help them during the financial year to give extra monetary benefits in the upcoming fiscal year like:
Companies have the freedom to claim a deduction in taxes under expenditure from the following:
Start-ups have the freedom to claim tax reduction in the case of preliminary costs incurred for setting up or an expansion of the business.
Private limited companies will have to register themselves under good and service tax as the indirect tax structure was unified in India and applies to all goods and services. The companies that have a turnover of more than 20 lakh per annum will have to file GST return.
Under GST certain goods and services are exempted and the supplier or manufacturer has authority to file NIL rated while demarking the goods and services being provided by them. Zero-rated supplies are that are exported will not be treated as supplies that are at NIL rate tax slab.
If the business turnover of the company is less than Rs. 75 lakh per annum and if the goods and services provided by you are not being sold outside the state your business is incorporated then your company will be eligible for composition schemes.