ITR for Company

Companies are required to file ITR under Income Tax act but they are taxed as per Corporate Tax rates. Corporate Tax is different from the other Income Tax, it is applicable on the corporates or companies registered under The Companies Act in India. 

A corporate is an entity that has a separate and independent legal entity from its shareholders. Domestic as well as foreign companies are liable to pay corporate tax under the Income-tax Act. While a domestic company is taxed on its universal income, a foreign company is only taxed on the income earned within India i.e. is being accrued or received in India.

For the purpose of calculation of taxes under Income tax act, the types of companies can be defined as under:

Domestic Company: Domestic Company is one which is registered under the Companies Act of India and also includes the company registered in the foreign countries having control and management wholly situated in India. A domestic company includes private as well as public companies.

Foreign Company: Foreign Company is one which is not registered under The Companies Act of India and has control & management located outside India.

Taxes on Income

The following rates are applicable to the domestic companies for AY 2020-21 based on their turnover

SectionsTax rateSurcharge
Section 115BA (Companies having turnover up to Rs 400 crore in FY 2017-18)25%7%/12%*
Section 115BAA22%10%
Section 115BAB15%10%
Any other case30%7%/12%*

*Plus surcharge in case a company gets taxed under section 115BA. The rate of surcharge is 7% in case the total income is above one crore rupees and up to Rs 10 crore. The surcharge is 12% in case total income is above Rs 10 crore. However, if a company opts for taxation under section 115BAA or section 115BAB, the surcharge is 10% irrespective of the total income.

The following rates are applicable to foreign companies for AY 2020-21 based on their turnover :

Nature of IncomeTax Rate
Royalty received or fees for technical services from government or any Indian concern under an agreement made before April 1, 1976 and  approved by central government50%
Any other income40%

In addition to above rates

Surcharge rate

ParticularsTax Rate
If total income exceeds Rs. 1 crore but not Rs. 10 Crore7% of tax calculated on domestic company/ 2 % of tax calculated on foreign company as per above rates
If total income exceeds Rs. 10 crore12% of tax calculated on domestic company/ 5 % of tax calculated on foreign company as per above rates

Health & education Cess

Further 4% of income tax calculated and applicable surcharge will be added to the amount of total tax liability before this cess.

Minimum Alternate Tax (MAT)

Alternatively, all the companies (including foreign companies) are required to pay minimum alternate tax at the rate of 15% on book profits if the tax calculated as per above rates are less than 15% of book profits. This will be applicable if the company does not opt for Section 115BAA or Section 115BAB.

ITR Form

Except those companies or organisations that claim tax exemption as per Section 11, the ITR-6 form is used only by all companies. Organisations that can claim tax exemptions as per Section 11 are organisations in which the income received is accumulated from the property used for the purpose of religion or charity. This particular income tax return form is only available to be filed online.

ITR 7 is to be filed by all the companies registered under section 8 of companies act, 2013. 

Tax Audit

Income tax act requires a class of companies to get their accounts audited and submit a audit report to the IT department along with the Income tax return. This audit is known as Tax Audit. This tax audit report is also required to be mandatorily submitted by eligible companies by 30 September.

The Companies Act 2013 mandates every company to keep its books of accounts and other relevant books and papers and financial statement giving a true and fair view on accrual basis and as per double entry system which shall be maintained at the registered office of the company for every financial year. Every company has to get its accounts audited by its Statutory Auditor irrespective of size and turnover and file the same with the Registrar of Companies.

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