Tax saving of company

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Querist : Anonymous

Querist : Anonymous (Querist)

11 October 2014 Can anyone tell me how a domestic company save its income tax? or Is deductions under section 80 are applicable to a company?

@VaibhavJ

@VaibhavJ (Expert)
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11 October 2014 what is type of business conducted by your co.

Thanks

Querist : Anonymous

Querist : Anonymous (Querist)

14 October 2014 It is a private limited company and a type of advisory co.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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26 July 2025 For a **domestic private limited advisory company**, here’s how income tax saving can generally work:

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### 1. **Applicability of Deductions under Section 80**

* **Most Section 80 deductions are for individuals and HUFs**, so companies *do not* get most of these (like 80C, 80D, etc.).
* However, **some specific deductions apply to companies**, such as:

* **Section 80IA/80IB/80IC**: For companies involved in infrastructure, industrial undertakings, or special economic zones (SEZ).
* **Section 80JJAA**: Deduction for additional employees employed (manufacturing companies).
* **Section 80M**: Deduction on dividends received from other domestic companies.
* Since it's an advisory company, these may not be applicable.

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### 2. **How Can a Private Limited Advisory Company Save Tax?**

* **Business expenses:** Deduct all legitimate expenses such as salaries, rent, office expenses, travel, communication, professional fees, depreciation, etc. These reduce the taxable profits.
* **Depreciation:** Claim depreciation on assets owned by the company.
* **Carry forward losses:** If there are any losses from previous years, they can be set off against current profits (subject to conditions).
* **Tax incentives or exemptions:** If the company qualifies for any government incentives (rare in advisory business).
* **Tax planning through salary to directors/shareholders:** Remuneration paid to directors or employees reduces taxable profit.
* **Dividend Distribution Tax (DDT) planning:** Although DDT was abolished in recent years, earlier companies paid DDT on dividend distribution; structuring dividend can help.
* **Advance tax payments and tax credits:** Ensure timely payments to avoid interest/penalties.

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### 3. **Tax Rates**

* Corporate tax rates are generally **flat (25% or 30%)** depending on turnover.
* Surcharge and cess are extra.

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### 4. **Other Options**

* Companies **cannot invest to save tax under 80C** like individuals.
* They should focus on **legal expense optimization and deductions related to business expenses**.
* If expansion in eligible sectors is planned, explore sector-specific tax benefits.

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### Summary

| Tax-saving method | Applicable for Advisory Pvt Ltd Company? |
| -------------------------------- | ---------------------------------------- |
| Section 80 deductions (80C etc.) | No |
| Business expenses deduction | Yes |
| Depreciation claim | Yes |
| Salary to directors/employees | Yes |
| Special deductions (80IA etc.) | Usually No for advisory |
| Loss set off | Yes, if applicable |

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If you want, I can help you identify expenses that can be claimed or suggest tax planning ideas tailored for your company. Would you like that?

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