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Tax Rates for Firms & LLPs

Publish Date: April 30, 2023

This article will explore the intricacies of taxation for limited liability companies (LLP’s), Partnership Firm & Co-Operative societies.


Income Tax on Partnership Firms & LLP’s in India:

Although Partnership Firms don’t have a separate legal entity, for the purpose of Income Tax, they are treated as different from their partners. Partnership Firms whether registered or unregistered are therefore required to register with the Income Tax Dept. and obtain a PAN Card No. and Income Tax on Partnership Firms is levied in the manner as explained below.

Moreover, for the purpose of Income Tax; LLP’s are treated the same as Partnership Firms and income tax on LLP’s is also levied in the same manner as Income Tax on Partnership Firms.

Income Tax Rate For Partnership Firm & LLP for FY 2023-24 (AY 2024-25)

Income Tax at a flat rate of 30% is levied on Partnership Firms and LLP’s. Computation of taxes as per Income Tax Slab Rates is not allowed as the benefit of Slab Rates is only available to Individuals and HUF’s.

Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees.

Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4 percent of such income-tax and surcharge.

Income Tax Rate to Co-operative Society for FY 2023-24 (AY 2024-25)

Normal Rates:

Taxable income Tax Rate
Up to Rs. 10,000 10%
Rs. 10,000 to Rs. 20,000 20%
 Above Rs. 20,000 30%

 

Surcharge:  It shall be charged at the following rates w.e.f. AY 2023-24, to reduce the surcharge on co-operative societies from present 12 per cent to 7 per cent for those having total income of more than 1 crore and up to 10 crores.
Range of Income Rs. 1 Crore to Rs.10 Crore Above Rs. 10 Crore
Surcharge Rate 7% 12%

Note: Marginal relief is provided in cases of surcharge.

Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

Special tax rates applicable to a Co-operative societies:

Taxable income Tax Rate
Any income 22%

Note 1: The Finance Act, 2020 has inserted a new Section 115BADin Income-tax Act to provide an option to the co-operative societies to get taxed at the rate of 22% plus 10% surcharge and 4% cess.

Note 2:. The resident co-operative societies have an option to opt for taxation under newly Section 115BAD of the Act w.e.f. Assessment Year 2021-22. The option once exercised under this section cannot be subsequently withdrawn for the same or any other previous year.

Note 3: If the new regime of Section 115BADis opted by a co-operative society, its income shall be computed without providing for specified exemption, deduction or incentive available under the Act. The option to pay tax at lower rates shall be available only if the total income of co-operative society is computed without claiming specified exemptions or deductions.

Note 4: The societies opting for this section have been kept out of the purview of Alternate Minimum Tax (AMT).

Note 5: Further, the provision relating to computation, carry forward and set-off of AMT credit shall not apply to these assessee’s.

Alternate Minimum Tax (AMT) on Co-operative Society:

Section 115JC of the Act, inter alia, provides for the alternate minimum tax (AMT) payable by co-operative societies, which is at the rate of 15%.

Note:

Concessional tax 15% to promote new manufacturing cooperative society Budget 2023 Amendment, In order to promote the growth of manufacturing in co-operative sector, a new co-operative society formed on or after 01.04.2023, which commences manufacturing or production by 31.03.2024 and do not avail of any specified incentive or deduction, is proposed to be allowed an option to pay tax at a concessional rate of 15 per cent similar to what is available to new manufacturing companies.

New section 140B proposes additional tax for filing an updated ITR under section 139(8A) late.

Equal to 25 per cent of aggregate of tax and interest payable if such return is furnished after the expiry of 12 months from the end of the relevant assessment year but before completion of the period of 24 months from the end of the relevant assessment year Equal to 50 per cent of aggregate of tax and interest payable.

 

 

 

 

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