Direct Taxation

Corporate tax is calculated based on the net taxable income of the company. The taxable income is determined by deducting allowable expenses, deductions, and exemptions from the gross total income. Currently, domestic companies are subject to a flat corporate tax rate of 25% (plus applicable surcharge and cess). However, certain specified companies, such as startups and small companies meeting certain criteria, may avail lower tax rates or exemptions as per the provisions of the Income Tax Act.

Capital gains tax in India is calculated based on the type of asset, holding period, and applicable tax rates. For assets held for less than 24 months, short-term capital gains tax applies, and the gains are added to the taxpayers total income and taxed at the applicable slab rates. For assets held for 24 months or more, long-term capital gains tax is applicable with indexation benefits. The tax rate for long-term capital gains on listed securities and equity-oriented mutual funds is different from other assets. It is advisable to consult with our experts for accurate calculations.

Yes, there are deductions available in India to reduce taxable income. Some common deductions include Section 80C for investments in Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificates (NSC) and life insurance premiums; Section 80D for health insurance premiums; Section 80E for educational loan interest; Section 80G for donations to charitable organizations; and Section 24(b) for home loan interest. These deductions help individuals lower their taxable income and, in turn, their tax liabilities. It is important to understand the specific provisions, limits, and conditions associated with each deduction and consult a tax professional for personalized advice while filing income tax returns.

Non-compliance with direct taxation laws in India can lead to various penalties and consequences. Late filing of tax returns can result in penalties based on the delay period and the taxpayer's total income. Inaccurate reporting or underreporting of income may attract penalties calculated as a percentage of the underreported amount. Delays in tax payment can incur interest charges as per the specified rates. Additionally, non-compliance can trigger tax audits and scrutiny by the income tax department. In severe cases involving deliberate tax evasion, fraudulent practices, or non-cooperation, taxpayers may face criminal prosecution, fines, and even imprisonment. It is crucial to comply with tax regulations, meet filing deadlines, and accurately report income to avoid such penalties and legal repercussions.