Taxes or Duties Payable for New Ventures in India
Starting
a new business in India comes with various tax and duty obligations.
Understanding these taxes helps ensure compliance and avoid legal issues.
1.
Direct Taxes (Income-Based)
a) Income Tax
- Applicable to all businesses based on their profits.
- Tax
Rates:
- Proprietorship
& Partnership Firms – Taxed as per individual slab rates.
- LLPs
& Private Limited Companies – Flat 22% corporate tax (new tax regime for domestic companies).
- Startups
under DPIIT (Startup India) – Eligible for tax exemption on profits for 3 years under
Section 80-IAC.
2.
Indirect Taxes (Transaction-Based)
a) Goods and Services Tax (GST)
- Mandatory
for businesses with turnover above ₹40 lakh (₹20 lakh for
services).
- GST
Slabs:
5%, 12%, 18%, 28% (varies by product/service).
- Startups can opt for the Composition
Scheme (reduced compliance, lower tax rates).
b) Customs Duty
- Applicable on imported goods, including raw materials
and equipment.
- Varies based on the product classification.
3.
Other Taxes & Duties
a) Professional Tax
- Levied by state governments on employees' salaries.
- Varies between ₹2,500 - ₹3,000 per year.
b) TDS (Tax Deducted at Source)
- Businesses must deduct and deposit TDS on payments made to employees,
contractors, and professionals (e.g., 10% on professional fees, 1% on
rent).
c) Stamp Duty & Registration Charges
- Paid when registering a company, property, or
agreements.
4.
Startup Tax Benefits
- Section
80-IAC:
100% tax exemption for 3 years for eligible startups.
- Section
56 (Angel Tax Exemption): Exemption on investments received from
investors.
- GST
Exemptions & Reimbursements: For certain startups in
government-supported sectors.
New ventures in India must
comply with various tax regulations based on their business model. Opting for
tax benefits and exemptions can reduce financial burdens and improve
profitability. Proper tax planning ensures smooth business operations and legal
compliance.
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