Taxation in a company

This discussion clarifies the tax differences between sole proprietorships and companies. In a company, directors are treated as employees and pay income tax on their salaries at normal slab rates, with TDS deducted under Section 192. Unlike a sole proprietorship where the owner's profit is their income, a company's profit belongs to shareholders. Directors are taxed on their salary, capital gains from share sales, and other incentives, while sole proprietors are taxed on business profits.