1. The income tax slabs for private limited companies in the assessment year 2023-24 are as follows:
✅ Section 115BA
If the total turnover or gross receipts of the company during the previous year 2020-21 does not exceed Rs. 400 crores, the income tax rate is 25%.
✅ Section 115BAA
If the company opts for the concessional tax rate under section 115BAA, the income tax rate is 22%.
✅ Section 115BAB
If the company opts for the new tax regime under section 115BAB, the income tax rate is 15%.
In addition to the income tax, a surcharge of 7% is levied on the taxable income of a company that exceeds Rs. 1 crore, and a surcharge of 12% is levied on the taxable income of a company that exceeds Rs. 10 crores. A cess of 4% is also levied on the total income tax and surcharge payable.
The following are the important points to note about the income tax slabs for private limited companies in the assessment year 2023-24:
✅ The company can choose to be taxed under any of the three sections mentioned above.
✅ The option to be taxed under section 115BAA or section 115BAB is available only for the assessment year 2023-24.
✅ The company can opt to change the section under which it wants to be taxed, but the change will be effective from the next assessment year.
2. Which section should a company choose?
The choice of which section to choose will depend on the individual circumstances of the company. The company should consider its turnover or gross receipts, its taxable income, and its other tax deductions and exemptions.
In general, companies with a turnover or gross receipts of less than Rs. 400 crores may be better off choosing section 115BA, as the income tax rate is lower. However, companies with a higher turnover or gross receipts may be better off choosing section 115BAA or section 115BAB, as the concessional tax rates may offset the surcharge and cess.
The company should also consider its other tax deductions and exemptions. For example, companies that have made investments in infrastructure or research and development may be able to claim additional deductions under section 35AD or section 35IB. These deductions may make it more beneficial for the company to choose section 115BAB, even if its turnover or gross receipts exceed Rs. 400 crores.
3. How to choose the right section?
The company should consult with a tax advisor to choose the right section. The tax advisor will be able to help the company assess its individual circumstances and make the best decision for its tax liability.
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