After going through the individual / personal taxes 2019, let us have a look into the company taxes applicable for the year 2019 under the present article. 

Companies are divided into the two categories under Income Tax i.e. domestic company and foreign company. Taxes on income paid by the company is referred to as ‘Corporate tax’. 

Section 2(22A) of the Income Tax Act, 1961 defines the term ‘Domestic Company’, on the other hand, section 2(23A) of the Income Tax Act, 1961 defines the term ‘Foreign Company’. As per the said definition, the domestic company means company which has made prescribed arrangement for declaration and payment of the dividend within India. Such dividend is payable out of the income liable to be taxed under the Income Tax. Definition of the term ‘Foreign company’ basically means a company which is not a domestic company. 

Income Tax Rates / Structure for Financial Year 2019-2020 (Assessment Year 2020-2021) – 

Income Tax Rates as applicable to a domestic company –

ParticularsIncome Tax Rates
Company whose turnover / gross receipt is less than INR 250 Crore in the previous year25%
Other companies30%

Surcharge applicable to a domestic company – 

Surcharge is payable over and above the income tax rates provided above –

ParticularsSurcharge rate
Income between INR 1 Crore to 10 Crore7% on the amount of the income tax 
Income above INR 10 Crore12% on the amount of the income tax 

Health and Education Cess applicable to a domestic company –

Health and education cess @4% is payable on the sum total of Income Tax plus Surcharge. 

Income Tax Rates as applicable to a foreign company –

Particulars Income Tax Rates
Royalty income as compensated by the Indian Government against the agreements executed with the Indian concern (after 31st March, 1961 and prior to 1st April, 1976)50%
Income by way of fees for any technical service provided as per the agreements executed with the Indian concern (after 29th February, 1964 and prior to 1st April, 1976)50%
All other incomes40%

Surcharge applicable to a foreign company – 

Surcharge is payable over and above the income tax rates provided above –

ParticularsSurcharge rate
Income between INR 1 Crore to 10 Crore2% on the amount of the income tax
Income above INR 10 Crore5% on the amount of the income tax

Health and Education Cess applicable to a domestic company –

Health and Education Cess @4% is payable on the sum total of Income Tax plus Surcharge. 

Dividend Distribution Tax –
Dividend distribution tax is payable / applicable to the domestic companies only. When the domestic company has declared or distributed or paid any amount by way of a dividend in such case the domestic company is required to pay ‘dividend distribution tax’.

The domestic company is required to pay dividend distribution tax @15%. However, in the case of deemed dividend referred to in section 2 (22) (e), the domestic company is required to pay dividend distribution tax @30%. 

Minimum Alternative Tax Rates (MAT) – 
Minimum Alternative Tax provisions are applicable to both the domestic companies and foreign companies. Section 115JB of the Income Tax Act, 1961 contains the provisions of the Minimum Alternative Tax. As per the said provisions, the company is required to pay higher of the following taxes –

1. Tax calculated as per the normal provisions of the Income Tax Act; and
2. Tax computed @18.5% of the book profits.

It should be noted that Minimum Alternative Tax is leviable @9% in case of the company being a unit of an International Financial Services and the company should be earning its income solely in convertible foreign exchange. 

ITR as applicable to the companies –

Following are the list of ITR as applicable to the companies –

Description Applicable ITR
Applicable to all the companies, other than companies claiming an exemption under section 11ITR – 6
Applicable for all the persons including companies who are required to file a return under section 139 (4A), 139 (4B), 139 (4C) or 139 (4D)ITR – 7

About The Author: CA Sandeep Kanoi is a Commerce Graduate and has done his CA in 2002. He has more than 18 years of experience in the field of Taxation, Accounting, Finance, Audit and Corporate Law. In December 2008 he formed Popular Tax Portal Taxguru https://taxguru.in and is Founder of the website and is currently associated with it as CEO of the same. He has been an active blogger for past many years and has been sharing his knowledge with the young professionals through various platforms and forums. He has been instrumental in the growth of taxguru.in and has himself contributed/authored more than 10000 articles/Judiciary on the website.

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