Levied Taxes on Business in India

Levied Taxes on Business in India : In many ways, a country like India has gone liberal except for that of the taxes and their layouts. The tax structure still remains complicated and the tax collectors are still widespread. Every nation’s rules, regulations, law practises, etc can not only be traumatising but also very confusing. There can be a case where a foreign based company with no aid to know their taxes might result in overpaying.

A corporate tax of 42% that is levied on foreign companies along with a 2.5% of surcharged and a 2% additional “education cess” on the amount that is taxable. The taxed dividends are called capital gains. For years now, maximum direct investments from foreign lands into India is directed through the land of Mauritius as per the capital gains treaty signed with them. GST registration law in India states that every foreign company that supplies goods and services to the country, either to an individual or another company must submit for GST registration and also file GSTR-5 form on a monthly basis for GST Returns.

The “Make in India” products are levied with a federal excise tax that amounts to about 16%. After the introduction of GST, a value added tax is charged in the place of the state and federal taxes. Before a certain deregulation came to play, almost 100% of customs taxes were levied upon items that were imported into the country but now the basic duty that’s being paid is 12.5%. An “education cess” and “additional duty” also becomes applicable to be paid to the customs for import goods.

Personal Income Tax and GST Returns

In the total collection of taxes by the government of India, there is a small portion which is the personal income tax rating to about 34%. Many individuals do not bother to file their income tax returns as their annual income falls much below the range of being taxable. The introduction of GST has subsumed the varied number of taxes that were filed separately by businesses into one. Thus it becomes mandatory that a manufacturer, a service provider, a trader or a reseller should file GST Returns for their respective businesses.

Levied Corporate Tax in India

An entity having individual legal body from its partners is defined as a corporate. The overall annual income that comes into the company is accounted separately from that of the shares that is divided to its shareholders or partners. This divided share is not calculated as part of the income of the company that is taxable but as part of the income given towards the partners. Thus the tax levied on the company is defined as corporate tax and that is again subdivided into domestic and foreign. Similar to that of an individual filing for income tax, so should companies and businesses pay and file taxes towards the income that is earned and also file for GST Returns on the Goods and services that the company provides.

Companies established in India have been subdivided into two, Domestic Corporate and Foreign Corporate.

Domestic Corporate – Any pure Indian company or a foreign company that is completely managed in India is termed as Domestic Corporate. These companies should be registered with the Companies Act 1956.
Foreign Corporate – A company with no Indian Origin to it but is managed in India with certain assets managed from foreign countries is termed as Foreign Corporates.

Multiple Business Taxes Levied in India

Health and education cess
In the total tax that is levied upon, 4% from the calculated income tax amount and its surcharges are added as part of the Health and Education cess.
Minimum Alternate Tax (MAT)
A 18.5% MAT is levied when it comes to local and foreign corporates. The calculations of the same depends solely on the profits achieved and the taxes calculated for it are either above or below 18.5%.
Dividend Distribution Tax
Corporates pay taxes on the amount that is paid off as dividends to their partners and shareholders annually. There is an exemption of this specific tax to about Rs.10 lakhs. The tax percentage paid by corporate is 20.56%.

GST Return

Goods and Service Tax acts as a single yet indirect tax that is applied on all the services and goods that go from the producers to the customers. It is considered as a value-add tax that is applied at different stages. Finally when it reaches the consumer, the amount of GST is charged by the respective supplier. Introduction of GST system in India has paved the way to much more transparent dealing of GST Returns, registrations, transactions, etc. Filing of returns can be done online.