Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Private Limited Profit-Double taxation

Himanshu Agarwal (Proprietor) (186 Points)

02 February 2024

Hello All,
in case of Pvt Ltd co when company earns the profit
it pays the tax on the same..
and When it is distributed to shareholders they again pay the tax on the same.
is it not double taxation?
and any better planning in case of closely knitted pvt Ltd company

Reply
Follow
Share

6 Replies

mayank singla (12 Points)
Replied 02 February 2024

Sir dividend mat dikhao salary dikha do 10 lakh tak 112500 (assuming old scheme) to agar 4 family members ha to 40 lakh salary, wahi sallary ni dikhaoge to 12 lakh tax on company profit, baaki jo personal kharche ha khane ka pine ka wo company ke expense dikha do

prasad Nilugal ( GST Practitioner & Accounts ) (14221 Points)
Replied 02 February 2024

As per the income tax act , Company & Shareholders are two different assesse and will be taxed as per their income . profit is companies income and Dividend distributed out of profit to share holders is shareholders income , so both are taxed according their income differently.

1 Like

sabyasachi mukherjee (26273 Points)
Replied 04 February 2024

The tds certificate is provided by the employer , employees take into account and seperate arrangements are being made.

RAJA P M ("Do the Right Thing...!!!") (127463 Points)
Replied 04 February 2024

@ My Dear Great Mr Sabyasachi Mukherjee Sir,

Where is Employer and Employees in this query...??

please note that...

Shree Ji Steel Corporation (staff) (22 Points)
Replied 05 February 2024

Hello,

Indeed, what you're describing is often referred to as "double taxation," which occurs when corporate profits are taxed at both the company level and again at the individual level when dividends are distributed to shareholders. This is a common feature of the corporate tax system in many countries, including but not limited to the United States, where corporations are treated as separate legal entities for tax.

For closely held private limited companies, several strategies might be employed to mitigate the impact of double taxation, although the specifics can depend greatly on the jurisdiction in which the company operates. Here are a few general strategies: