In the case of domestic companies, there is no change in the tax rates in respect of AY 2022-23, as per the Indian Finance Act, 2022. Therefore, the tax rates for domestic companies shall remain the same as those specified for the AY 20-22 in the Finance Act 2021.
It may be noted that “domestic company” means an Indian company or any other company that has made the prescribed arrangements for the declaration and payment within India of dividends (including dividends on preference shares) out of its income liable to income tax under the Income Tax Act.
Income Tax Rates for Domestic Companies and Indian Companies in AY 2022-23 are 25% if the turnover is up to Rs. 400 crore and 30% if it is over Rs. 400 crore. Companies covered by Sections 115BA, 115BAA, and 115B have lower rates:
|Categories/ Conditions for differential tax rates||Income Tax Rate|
|If the turnover or gross receipts of a domestic company did not exceed Rs. 400 crores in the previous year 2018-19||25%|
|Domestic companies covered u/s 115BA||25%|
|Domestic companies covered u/s 115BAA||22%|
|Domestic companies covered u/s 115BAB||15%|
|Regarding all other domestic companies||30%|
In addition, surcharge, health and education cess (HEC), and minimum alternate tax (MAT) provisions shall be applicable in the case of domestic companies, as under:
The income tax liability so computed (including u/s 111A, 112, or 112A), a domestic company shall be liable to a surcharge of 7% where total income is above Rs. 1 crore but is up to Rs. 10 crore, and of 12% where total income exceeds Rs. 10 crore. However, in the case of companies covered u/s 115BAA and 115BAB, a surcharge of 10% shall be applicable.
In all cases, the amount of the surcharge is subject to rules about marginal relief, if they apply.
Higher Education Cess (HEC)
The aggregate amount of income tax and surcharge shall be subject to health and education taxes (HEC) at 4% in the case of domestic companies.
Minimum Alternate Tax (MAT)
Where the normal tax liability of the domestic company is less than 15% of the book profits, the minimum alternate tax (MAT) shall be applicable at the rate of 15% of the book profits, except in the case of companies covered u/s 115BAA and 115BAB. Besides, the surcharge and health and education cess shall be applicable, as above.
For a company that is part of an IFSC and gets all of its income in convertible foreign exchange (CFE), the MAT rate is 9%.
Domestic companies opting for concessional taxation rates u/s 115BAA and 115BAB are exempt from MAT; however, these companies are not eligible to get certain deductions, i.e., u/s 80IA, 80IAB, 80IAC, 80IB, etc., except under 80JJAA and 80M.
Related Posts: >> Finance Act, 2022 <<
|Income Tax Slabs/ Rates:||Income Tax Cess, Surcharge & Rebate|
|Resident Individuals||Education Cess Rates|
|NRIs/ HUFs/ AOP/ BOI/ AJP||Surcharge Rates|
|Partnership Firms and LLPs||Marginal Relief from Surcharge|
|Domestic Companies||Rebate u/s 87A for Individuals|