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Income tax for various forms of business

Gurudas (Start-up) (36 Points)

15 March 2017

Lets say that you have an option to start any of the following :- 1. Proprietorship firm 2. LLP 3. Private Ltd Company 4. Partnership Firm 5. Single Person Company Which one is suitable considering Tax liability. ( Income Tax) Lets us assume that each one of them makes a profit of 30 Lakh in a year, What would be Income tax amount payable for each one?

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CA V KARTHICK (Chartered Accountant in Practice) (506 Points)
Replied 20 March 2017

For a Start up it would be better to go with either Proprietorship or Partnership considering the Tax impact alone.

For a company the tax liability would be at 30% on profits. Additionallly Dividend Distribution Tax around 20% for distributing Dividend will be levied.

If the Dividend income crosses Rs 10,00,000 the same will be taxable in the hands of individual too.

The Tax rate for Partnership would be 30% . But 2,70,000 for First 3,00,000 earned + 60% of any profit in Excess of 3,00,000 can be transferred to Partners as Remeneration

Propeirtory Concerns will be taxed at Slab Rates :

Nil for First 2,50,000

10% from 2,50,000 To 5,00,000

20% from 5,00,000 To 10,00,000

30% for income above 10,00,000

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