India Accounting Questions Answered

What is the corporate income tax rate in India?

Most Indian companies pay corporate income tax at an effective rate of ~25.17% (22% base under Section 115BAA + 10% surcharge + 4% cess). New manufacturing companies incorporated after 1 October 2019 can pay ~17.01% (15% base under Section 115BAB). The old regime base rate of 30% (effective ~34.94% for large companies) is rarely optimal for most businesses.

How is a director's salary taxed in India and what TDS applies?

A director's salary in a Private Limited company is taxed as salary income under Section 192 (TDS at applicable income tax slab rates). The company deducts TDS monthly and deposits it with the government. The salary must be commercially reasonable (typically supported by a Board resolution and market comparisons) to be deductible by the company. Sitting fees paid to non-executive directors are taxed under Section 194J at 10% TDS (above INR 30,000 per year).

How do I calculate and pay advance tax in India?

Advance tax in India is paid in four instalments: 15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March. Calculate it by estimating your full-year net profit, applying your applicable corporate tax rate (typically ~25.17% under Section 115BAA), deducting TDS credits already received, and paying the percentage due in each instalment. Non-payment attracts interest under Section 234C (1% per month per instalment) and Section 234B (1% per month overall shortfall from April).

What are the TDS rates for common business payments in India?

Key TDS rates for companies in India (FY 2025-26): Salary (Section 192, slab rates), Professional fees (Section 194J, 10% above INR 30,000/year), Technical services (Section 194J, 2%), Contractor payments (Section 194C, 1% individual/2% others above INR 30,000 per contract or INR 1 lakh cumulative), Rent on land/building (Section 194I, 10% above INR 2.4 lakh/year), Dividends (Section 194, 10% above INR 5,000).

What is the Startup India 3-year tax exemption under Section 80-IAC?

Section 80-IAC provides a 100% income tax deduction on profits for any 3 consecutive assessment years out of the first 10 years for DPIIT-recognised startups. The startup must be incorporated between 1 April 2016 and 31 March 2025 (deadline extended multiple times), with aggregate turnover not exceeding INR 100 crore in any year the deduction is claimed. Minimum Alternate Tax (MAT) at 15% of book profit may still apply under the old tax regime.

What is the GST registration threshold in India?

The mandatory GST registration threshold in India is INR 20 lakh aggregate annual turnover for most states and INR 10 lakh for special category states (northeast, hill states). For businesses supplying only goods (not services), the threshold is INR 40 lakh. However, several categories of businesses must register regardless of turnover, including businesses making inter-state supplies, e-commerce sellers, and businesses required to pay under the reverse charge mechanism.

How does GST return filing work in India?

GST-registered businesses in India must file GSTR-1 (outward supplies, due 11th of following month for monthly filers) and GSTR-3B (summary return with tax payment, due 20th for large businesses) every month. An annual GSTR-9 return is due by 31 December of the following year. E-invoicing is mandatory for businesses with turnover above INR 5 crore. All filings are electronic through the GST portal (gst.gov.in).

How do I set up a Private Limited company in India?

A Private Limited company in India is incorporated via the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) integrated form on the MCA21 portal (mca.gov.in). The process typically takes 7-15 working days and costs INR 1,000-6,000 in government fees depending on share capital. You need minimum 2 directors and 2 shareholders (can be the same person), a registered office address in India, Director Identification Numbers (DIN), and Digital Signature Certificates (DSC) for all proposed directors.

What is ROC annual compliance for Private Limited companies in India?

Every Indian Private Limited company must file Form AOC-4 (financial statements) within 30 days of its AGM and Form MGT-7 (annual return) within 60 days of its AGM with the Registrar of Companies via MCA21. For most companies with a 31 March year-end, the AGM must be held by 30 September, making AOC-4 due by 30 October and MGT-7 by 29 November. Directors must also file DIR-3 KYC annually by 30 September.