What is Corporate Tax?

For an NRI, I think it's important to separate owning a company from the company's tax liability.

If an NRI owns shares in an Indian company, the company itself can have an Indian corporate-tax liability based on its taxable income.

The NRI shareholder can separately have tax consequences on things such as salary, dividends, capital gains or other income, depending on the circumstances.

So the company's tax and the shareholder's personal tax aren't necessarily the same thing.

Also, an Indian company and a foreign company doing business in India can have different tax rules, so the company's residence and activities matter.

I initially thought corporate tax and GST were basically the same thing, but they're completely different.

GST is generally an indirect tax associated with the supply of goods and services.

Corporate income tax, on the other hand, relates to the company's taxable income.

So a company can potentially have both GST compliance and income-tax compliance, depending on what it does.

Corporate tax also isn't necessarily the same as the personal income tax paid by an individual proprietor. The taxpayer and applicable tax rules are different.

The basic concept is that corporate tax is a tax on the taxable income of a company.

It's generally not calculated simply by taking a percentage of the company's total sales.

A company may have revenue of ₹1 crore, for example, but it can have business expenses that are allowable under the tax rules. The taxable income is determined after applying the applicable tax provisions.

The company then pays tax according to the rate and regime applicable to it.

There can also be additional components such as surcharge and cess, depending on the circumstances.

Are there any options to save corporate tax?

Below are the different types of corporate tax:  

1. Domestic Companies Tax: It includes Pvt Ltd companies that are registered in India. All the companies under such criteria are required to pay the liable tax on the basis of their annual income. 
2. Foreign Companies Tax: If a company operates in India but is registered outside, then these companies have to pay taxes on the income earned in India only. 
3. Minimum Alternate Tax: The MAT is introduced, which allows all companies to pay a minimum amount of tax on their profits, and it ensures that all contribute to the tax pool for claiming deductions and exemptions. 
4. Dividend Distribution Tax (DDT): DDT is the tax that you need to pay before the dividends are distributed. and the government receives tax on the distributed profits. 
5. Surcharge and Cess: Corporations need to pay surcharges and cess, which are calculated as a percentage and contribute to national funds and welfare programs.