Saturday, January 6, 2024

Domestic Company Tax Rates for AY 2023-24 and 2024-25

 As the financial year 2023-24 approaches its culmination, companies must strategically navigate the ever-evolving landscape of income tax rates, especially those applicable to domestic entities. This guide sheds light on the rates for the assessment year 2023-24 and provides a glimpse into the subsequent year, 2024-25.

1. Standard Rates for Domestic Companies

In the 4th quarter, companies need to assess their turnover or gross receipt status to determine the applicable tax rates:

Turnover/Gross ReceiptAssessment Year 2023-24Assessment Year 2024-25
Up to 2020-21 (≤ Rs. 400 crore)25%NA
Up to 2021-22 (≤ Rs. 400 crore)NA25%
Any Other Domestic Company30%30%

2. Additional Components: Surcharge and Health & Education Cess

Given the financial dynamics in the 4th quarter, it's crucial to understand the surcharge and health & education cess implications:

  • Surcharge:

    • One crore to ten crore rupees: 7%
    • Exceeding ten crore rupees: 12%
    • Subject to marginal relief, preventing excessive tax burdens.
  • Health and Education Cess:

    • Calculated at four percent of income-tax and surcharge.

3. Minimum Alternate Tax (MAT)

For companies where tax payable is less than 15% of 'book profit,' MAT becomes relevant. The standard rate is 15%, but for specific cases like IFSC units, the rate is 9% in the 4th quarter.

4. Special Tax Rates for Domestic Companies

In this critical phase, companies can explore special tax rates under various sections:

SectionTax Rate

5. Surcharge and Health & Education Cess for Special Tax Rates

Special rates come with specific surcharge and health & education cess details:

  • Surcharge:

    • A flat 10% for companies opting for Section 115BAA or Section 115BAB.
  • Health and Education Cess:

    • Calculated at four percent of income-tax and surcharge.

6. MAT Exemptions

The 4th quarter prompts companies to assess MAT implications, with exemptions for those opting for special taxation under Section 115BAA & 115BAB. However, no such exemption exists under MAT for Section 115BA.

7. Strategic Planning for Tax Payment

In the 4th quarter, strategic financial planning becomes imperative. Companies should evaluate eligibility for special tax rates, exemptions, and MAT implications to optimize tax liabilities.

Understanding these tax rates and provisions at this juncture is not just about compliance but about strategically positioning companies for sustained growth. As we conclude the financial year, let this guide be your compass for informed decision-making in the realm of income taxation for domestic companies in India.

[As amended by Finance Act, 2023]