Income tax for pvt limited company

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Anoob (Querist)
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22 March 2019 Hello ,

I am planning to convert my partnership firm to a pvt limited company, then i came across some taxation complication that i thought of clarifying in this forum ,queries are given below :

1) Dividend Distribution tax is applicable for distribution of profit int he case of PVT limited also ? (there are 3 director/share holders )

2) I have roughly calculated the total tax as 25% for the company profit +15 % (SC+Cess) as dividend distribution tax + 10% of tax for the dividend receipt (if more than 10 lacs ) =about 50% !!! ,is this calculation is correct in the case of a pVT limited ?

3) If drawing the money as salary for the director then maximum tax will be only 28%,if so everybody will take this route !

Kindly give your expert view

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 March 2019 1 yes applicable.
2 yes calculation is right divided distribution tax will be 20% after grossing up.
3 yes you are right but limit is there for salary payment.

Anoob

Anoob (Querist)
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22 March 2019 Thanks a lot sir for your reply ...
One more clarification is required on maximum limit of salary for the directors , i understood that the limit is not applicable for PVT LTD. ,could you please clarify this ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 March 2019 Yes agreed with you limit not applicable.

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