Complete Guide to Private Limited Company Tax Rate & Return Filing in India
Table of Contents:
- Introduction to Private Limited Company Taxation
- Tax Slabs and Corporate Tax Rates for Private Limited Companies
- Special Tax Schemes and Incentives
- Tax Return Filing Process for Private Limited Companies
- GST Compliance for Private Limited Companies
- Advance Tax & TDS Obligations
- Key Deductions & Allowances
- Penalties for Non-Compliance
- Frequently Asked Questions (FAQs)
- Conclusion
1. Introduction to Private Limited Company Taxation
A Private Limited Company (Pvt Ltd) in India is subject to corporate income tax levied by the Income Tax Department under the Income Tax Act, 1961. The tax rate varies depending on the company’s turnover, industry, and special tax schemes.
2. Tax Slabs and Corporate Tax Rates for Private Limited Companies
The corporate tax rate applicable to private limited companies is as follows:
| Criteria | Tax Rate |
|---|---|
| Companies with turnover ≤ ₹400 crore (as per FY 2019-20) | 25% |
| Companies with turnover > ₹400 crore | 30% |
| Companies opting for Section 115BAA (New Regime for Domestic Companies) | 22% (without exemptions) |
| Companies opting for Section 115BAB (New Regime for Manufacturing Companies) | 15% (without exemptions) |
| Minimum Alternate Tax (MAT) (if applicable) | 15% |
📌 Surcharge & Cess:
- Surcharge: 7% if income exceeds ₹1 crore, 12% if income exceeds ₹10 crore.
- Health & Education Cess: 4% on the total tax payable.
3. Special Tax Schemes and Incentives
1. Section 115BAA (Reduced Tax for Domestic Companies)
✅ Tax rate: 22% ✅ No MAT applicable ✅ Companies must forego various deductions (e.g., accelerated depreciation, SEZ benefits)
2. Section 115BAB (New Domestic Manufacturing Companies)
✅ Tax rate: 15% ✅ Applicable only to manufacturing companies registered after October 1, 2019 and starting production before March 31, 2024. ✅ No MAT applicable
3. Start-up Tax Exemption (Section 80-IAC)
✅ Eligible start-ups (recognized by DPIIT) can claim 100% tax exemption for 3 consecutive years out of the first 10 years. ✅ Turnover should not exceed ₹100 crore.
4. Tax Holiday for SEZ Units (Section 10AA)
✅ 100% tax exemption for first 5 years, followed by 50% exemption for next 5 years.
4. Tax Return Filing Process for Private Limited Companies
Steps for Filing ITR
- Determine the applicable ITR Form:
- ITR-6 is applicable for Private Limited Companies.
- Maintain proper financial records:
- Balance sheet, profit & loss statement, TDS records, GST details, etc.
- Compute total taxable income & deductions.
- Pay advance tax (if applicable).
- File ITR through the Income Tax e-Filing Portal (https://www.incometax.gov.in/).
- Verify the ITR digitally using DSC (Digital Signature Certificate).
- Submit before the due date.
Due Dates for Tax Filing
- Companies not requiring audit: July 31 of the assessment year.
- Companies requiring audit (under Section 44AB): October 31 of the assessment year.
- Companies subject to Transfer Pricing Regulations: November 30 of the assessment year.
5. GST Compliance for Private Limited Companies
GST Applicability:
✅ Mandatory Registration: If turnover exceeds ₹40 lakh (₹20 lakh for special category states).
✅ GST Rates: Varies between 5% to 28% depending on the nature of goods/services. ✅ GST Return Filing: Monthly/Quarterly GSTR-1, GSTR-3B, and Annual GSTR-9. ✅ Reverse Charge Mechanism (RCM): Applicable for specified services.
6. Advance Tax & TDS Obligations
Advance Tax Payment:
Companies must pay advance tax in the following installments:
| Due Date | Advance Tax Payable |
|---|---|
| June 15 | 15% of estimated tax |
| September 15 | 45% of estimated tax |
| December 15 | 75% of estimated tax |
| March 15 | 100% of estimated tax |
TDS Compliance:
- Companies must deduct and deposit TDS (Tax Deducted at Source) for payments exceeding specified limits (e.g., salaries, contractor payments, rent).
- TDS Returns (Form 24Q/26Q) must be filed quarterly.
7. Key Deductions & Allowances
✅ Depreciation (Section 32) – Accelerated depreciation for capital investments.
✅ Business Expenses (Section 37) – Salaries, rent, marketing expenses are deductible.
✅ R&D Deductions (Section 35) – 100-150% deduction for R&D expenses.
✅ Bad Debt Write-Off (Section 36) – Deduction for irrecoverable loans.
✅ Donation Deductions (Section 80G) – Donations to charitable institutions eligible for deduction.
8. Penalties for Non-Compliance
| Non-Compliance Issue | Penalty |
|---|---|
| Late Filing of ITR | ₹10,000 if filed after due date |
| Non-payment of Advance Tax | Interest @1% per month under Section 234B/C |
| TDS Non-Deduction | 30% disallowance of expense |
| Non-filing of GST Returns | Late fee ₹50 per day (₹20 for NIL returns) |
| Non-Maintenance of Books | ₹25,000 to ₹1,00,000 |
9. Frequently Asked Questions (FAQs)
1. What is the corporate tax rate for a newly incorporated Pvt Ltd company?
If opting for Section 115BAA, the tax rate is 22% without exemptions. For new manufacturing companies under Section 115BAB, the tax rate is 15%.
2. Can a Private Limited Company claim tax exemptions?
Yes, companies can avail startup tax exemptions, SEZ tax holidays, and deductions on expenses.
3. What happens if a company does not file ITR?
Late filing attracts a penalty of ₹10,000 and additional interest under Section 234F.
4. Is GST mandatory for Private Limited Companies?
Yes, if turnover exceeds ₹40 lakh (₹20 lakh for special category states).
5. What is MAT (Minimum Alternate Tax)?
MAT applies to companies with low taxable income due to deductions, ensuring they pay a minimum 15% tax on book profits.
10. Conclusion
Understanding corporate tax rates, GST obligations, and compliance requirements is crucial for Private Limited Companies. Proper tax planning, availing available exemptions, and ensuring timely return filing can help companies optimize tax liabilities and avoid penalties.
📢 Need tax filing assistance? Consult a CA or use online tax filing portals like ClearTax & TaxBuddy! 🚀