TAX RATES
TAX RATES
• Default (New Tax Regime)
Up to ₹4,00,000 0
₹4L – ₹8L 5%
₹8L – ₹12L 10%
₹12L – ₹16L 15%
₹16L – ₹20L 20%
₹20L – ₹24L 25%
Above ₹24L 30%
OLD TAX REGIME SLABS
Income Range Tax Rate
Up to ₹2,50,000 NIL
₹2,50,001 – ₹5,00,000 5%
₹5,00,001 – ₹10,00,000 20%
Above ₹10,00,000 30%
OLD TAX REGIME – SENIOR CITIZENS (60 to <80 years)
Income Range Tax Rate
Up to ₹3,00,000 NIL
₹3,00,001 – ₹5,00,000 5%
₹5,00,001 – ₹10,00,000 20%
Above ₹10,00,000 30%
• OLD TAX REGIME – VERY SENIOR CITIZENS (80 years & above)
Income Range Tax Rate
Up to ₹5,00,000 NIL
₹5,00,001 – ₹10,00,000 20%
Above ₹10,00,000 30%
SURCHARGE FOR INDIVIDUALS
Under Default regime
Total Income Rate of Surcharge
≤ ₹50L NIL
₹50 lakh – ₹1 crore 10%
₹1 crore – ₹2 crore 15%
₹2 crore – ₹5 crore 25%*
Above ₹5 crore 25%
Under old regime
Total Income Rate of Surcharge
₹50L – ₹1Cr 10%
₹1Cr – ₹2Cr 15%
₹2Cr – ₹5Cr 25%
> ₹5Cr 37%
MARGINAL RELIEF
• Marginal relief is a tax provision that prevents a sudden jump in tax liability when your
income exceeds a threshold by a small amount. Suppose:
• Without marginal relief:
• Income = ₹50,00,000 → no surcharge.
• Income = ₹50,01,000 → surcharge applies, potentially increasing tax by much more than
₹1,000.
• With marginal relief:
• The additional tax payable cannot exceed the amount by which the income exceeds the
threshold. This is calculated by using a formula.
Particulars Amount (₹)
Tax on Total Income (₹50,10,000) 13,15,500
Add: Surcharge @ 10% 1,31,550
Tax + Surcharge 14,47,050
Less: Marginal Relief (1,24,550)
Tax after Marginal Relief 13,22,500
Add: HEC @ 4% 52,900
Tax Payable 13,75,400
Particulars Amount (₹)
Tax + Surcharge on ₹50,10,000 14,47,050
Less: [Tax on ₹50,00,000 (₹13,12,500) + Excess
(13,22,500)
Income (₹10,000)]
Marginal Relief 1,24,550
CESS
• Cess = Additional tax charged on total tax liability which is 4%
Point Explanation
Applied on Tax + Surcharge
Not applied on Income
Same for all Individuals, firms, companies
Always last step After all calculations
CORPORATE TAXATION IN
INDIA
DOMESTIC VS FOREIGN COMPANIES
Domestic Company (Indian) Foreign Company
Registered in India Registered outside India
Pays tax on all income (India + outside India) Pays tax only on income earned in India
INCOME OF A COMPANY
1. Profits earned from the business
2. Capital Gains
3. Income from renting property
4. Income from other sources like dividends, interest
CORPORATE TAX RATES
Domestic Company Foreign Company
Concessional Regime 35% → Normal income
15% → New Manufacturing Surcharge
22% → Other Companies Income 1-10 crores → 2%
Normal Regime Income above 10 crores →5%
25% → Turnover ≤ ₹400 Cr in 2023-24
30% → Turnover > ₹400 Cr
Surcharge
Income 1-10 crores → 7%
Income above 10 crores →12%
Concessional Regime→10%
MINIMUM ALTERNATE TAX (MAT)
• MAT ensures that companies pay a minimum level of tax(Based on book profit, not taxable
income). Minimum Alternate Tax (MAT) ensures companies pay a minimum tax on book
profits even if normal tax liability is low due to deductions.
• MAT Rate=15% of Book Profit + surcharge and cess.
• MAT rate reduced from 15% to 14% in Budget 2026.
• Tax Payable = Higher of Normal Tax Liability and MAT Liability
CORPORATE TAX PLANNING
Tax Planning Strategy Explanation Example
A business operates as a company because the
Selecting the most tax-efficient form of
Choice of Business Structure corporate tax rate is lower than the individual tax
business.
rate applicable to the owner.
A company clears outstanding statutory
Accelerating deductible expenses to
Timing of Expenses
reduce current-year taxable income.
liabilities before the due date to claim
deductions allowed under tax law.
Company negotiates with a customer and agrees
Deferring income to a later year when that delivery will occur on 5 April instead of 30
Timing of Income
legally permitted. March because the customer needs the goods
later.
A manufacturing company purchases machinery
Maximizing depreciation deductions on
Depreciation Planning for ₹50 lakh and claims depreciation, reducing
assets.
taxable profits.
Utilizing deductions and incentives A company sets up operations in an eligible SEZ
Tax Incentives & Deductions
provided by law. and claims available tax benefits.
Instead of issuing shares, a company borrows
Choosing between debt and equity
Capital Structure Planning funds and claims interest expense as a tax
financing.
deduction.
Loss Set-Off and Carry Using current or past losses to reduce A company incurs a loss of ₹10 lakh in Year 1 and
Forward tax. sets it off against profits in Year 2.
An Indian company earning income in the UK
Utilizing tax treaties and foreign tax
International Tax Planning claims credit in India for tax already paid in the
credits.
UK.
• Profit Before Tax Planning = ₹1,00,00,000 and Corporate Tax Rate = 30%
Machinery purchased for ₹20,00,000.
Depreciation Planning 97,00,000
Depreciation = ₹3,00,000.
Necessary repairs of ₹4,00,000 completed
Timing of Expenses 93,00,000
before year-end.
Capital Structure Planning Interest expense on loan = ₹10,00,000. 83,00,000
Loss Carry Forward Brought-forward loss = ₹8,00,000. 75,00,000
Tax Incentives/Deductions Eligible deduction = ₹5,00,000. 70,00,000
R&D Tax Benefits Research expenditure = ₹12,00,000. 58,00,000
International Tax Planning Foreign tax credit available = ₹3,00,000. Taxable income unchanged
Alternative structure reduces tax rate
Choice of Business Structure Taxable income unchanged
from 35% to 30%.
Particulars Without Planning (₹) With Planning (₹)
Taxable Income 1,00,00,000 58,00,000
Tax @ 30% 30,00,000 17,40,000
Tax Saved 12,60,000
TAX INCENTIVES
• Tax incentives are available to businesses in India depending on the economic
activity, industry, location, and size of the firm. Investors become eligible for most of
India’s tax breaks and incentives after registering with the Ministry of Corporate
Affairs.
Category Benefit
Profit = ₹10 lakh
100% deduction (first 5 years), 50%
First 5 years → No tax
Export Businesses (next 5 years), extra 50% on
Next 5 years → Tax only on ₹5 lakh
reinvested profits
100% exemption for any 3 years Startups don’t pay tax in early years
Start-ups
(within 10 years) → helps survival
100% tax holiday (5 yrs), 50% (next
SEZ Units
5 yrs) …..
Industry Capital Expenditure Deductions Immediate deductions for capital
Investment expenditure in designated business
areas
TDS AND TCS SESSION
PURPOSE OF TDS AND TCS
• Common Purpose of TDS and TCS
1. To ensure early and regular collection of taxes.
2. To reduce tax evasion.
3. To widen the tax base by bringing more taxpayers into the tax system.
4. To facilitate tracking of financial transactions.
5. To provide a continuous flow of revenue to the Government.
6. To improve overall tax compliance.
CONCEPT & PURPOSE OF TDS
• TDS (Tax Deducted at Source) means tax is deducted at the time of payment itself by
the payer.
• Process:
1. Deduct TDS – Tax is deducted at the prescribed rate at the time of payment or credit,
whichever is earlier by the payer.
2. Deposit TDS – The deducted tax is deposited with the Central Government by payer.
3. File TDS Return – The deductor(payer) files the prescribed TDS return.
4. Issue TDS Certificate – A TDS certificate is issued to the deductee(payee)
5. Claim Tax Credit – The deductee claims TDS credit while filing the Income Tax Return
(ITR).
Salary TDS on salary As per average tax Income = ₹8,00,000
income deducted by rate Tax = ₹75,400
employer Average rate = 75,400
/ 8,00,000 = 9.425%
Employer deducts
TDS at 9.425% on
salary
TDS applies on General 10% FD = ₹15 lakh @9%
interest (not Limit:₹10,000 for 6 months
securities) Special Case (Banks, Interest = ₹67,500
Co-op banks, Post TDS @10% = ₹6,750
office):₹50,000
Senior Citizens:
₹1,00,000
Contractors Payments to: 1% → Individual / HUF Payment = ₹1,00,000
Contractor contractor to Mr. A (individual)
Sub-contractor 2% → Others TDS @1% = ₹1,000
Single payment ≤ Net payment =
₹30,000 → No TDS ₹99,000
Aggregate ≤ ₹1,00,000
→ No TDS
Rent XYZ Ltd pays office
rent
Plant / Machinery / Rent = ₹80,000 per
Equipment AND month
Land / Building / 2% /10% TDS = 10% of ₹80,000
Furniture / Fittings = ₹8,000
If rent ≤ ₹50,000 per Payment:
month – No TDS ₹72,000 to landlord
₹8,000 TDS
Professional fees Company pays CA
fees = ₹50,000
TDS = 10% = ₹5,000
Company pays
₹30,000 per category 10% (for tech 2%) software maintenance
= ₹40,000
TDS = 2% = ₹800
Cash withdrawal Withdrawn = ₹1.20
If a person withdraws
2% exceeding one crore TDS = 2% of ₹20
cash > ₹1 crore from
crore lakh= ₹40,000
bank in a year
TDS COMPLIANCE AND RETURNS
Deductor Type Due Date of depositing TDS
Govt Same day
Others (April–Feb) 7th of next month
March month 30th April
Section Form/Return
Salary 24Q
Non-salary (resident) 26Q
Non-resident 27Q
TCS 27EQ
Due Date of Filing TDS
Quarter Period
forms/return
Q1 Apr–Jun 31 July
Q2 Jul–Sep 31 Oct
Q3 Oct–Dec 31 Jan
Q4 Jan–Mar 31 May
• TAN is a 10-character alphanumeric number allotted by the Income Tax
Department to every person who is required to deduct Tax Deducted at Source (TDS)
or collect Tax Collected at Source (TCS).
• TAN is used for:
1. Depositing TDS/TCS with the Government.
2. Filing TDS/TCS returns.
3. Issuing TDS certificates (Form 16/16A).
4. Correspondence with the Income Tax Department.
CONCEPT OF TCS
• TCS (Tax Collected at Source) is a system under the Income-tax Act, 1961 where the seller
collects tax from the buyer at the time of sale or receipt of payment and deposits it with
the Government.
• Process
• Step 1: Sale takes place-A seller sells specified goods or services.
• Step 2: Seller collects TCS-The seller charges the buyer along with TCS
• Step 3: Seller deposits TCS-The seller deposits the collected tax with the Government.
• Step 4:The seller filesTCS Return (containing details of TCS collected and deposited) and
issues certificate.
• Step 4: Buyer claims credit-The buyer can see the TCS in Form 26AS and claim it while filing
the Income Tax Return (ITR).
Nature Rate
Alcoholic liquor 1%
Tendu leaves 5%
Timber (forest lease) 2%
Timber (other mode) 2%
Scrap 1%
Minerals (coal, lignite, iron ore) 1%
Parking lot 2%
Toll plaza 2%
Mining/quarry 2%
Section Nature of Transaction Threshold Rate
Sale of Motor Vehicle
206C(1F) Applies per vehicle Not Value > ₹10 lakh 1%
aggregate
Section Nature of Transaction Threshold Rate
Remitted abroad
206C(1G) - -
From education loan
Education /medical In excess of 10 lacs 5%
In excess of 10 lacs
Other purposes 20%
Overseas tour 5% till 10 lacs and 20%
Package thereafter
Section Nature of Transaction Threshold Rate
206C(1H) Sale of goods (general) > ₹50 lakh (per buyer) 0.1%
TCS COMPLIANCE
Month of Collection Due Date of depositing TCS
April – Feb 7th of next month
March 30th April
Quarter Due Date of filing TCS form/return (27EQ)
Apr–Jun 15 July
Jul–Sep 15 Oct
Oct–Dec 15 Jan
Jan–Mar 15 May
TDS AND TCS CERTIFICATES
Particular TDS Certificate TCS Certificate
Purpose Proof of tax deducted at source Proof of tax collected at source
Issued by Deductor (payer) Collector/Seller
Issued to Deductee (payee) Buyer
Form 16 (Salary) and Form
Certificate Form Form 27D
16A (Other payments)
To claim TDS credit while filing To claim TCS credit while filing
Use
ITR ITR
TAX AUDIT SESSION
MEANING OF TAX AUDIT
• Tax audit is an audit conducted to verify the correctness of income, deductions, and compliance
with tax laws.
• You MUST get accounts audited by a Chartered Accountant before the specified date
[Link] Turnover > ₹1 crore → Audit required
[Link] audit is not required up to ₹10 crore turnover in case of business, only if BOTH
conditions are satisfied:
1. Cash receipts ≤ 5% of total receipts
2. Cash payments ≤ 5% of total payments
3. Lower profit than presumptive = audit compulsory
4. carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees
• A Tax Audit Report is a report given by a Chartered Accountant after examining books
of accounts.
• There are 2 main reports + 1 statement(Under old act)
1. Form 3CA- Used when accounts are already audited under another law
2. Form 3CB-Used when accounts are NOT audited elsewhere
3. Form 3CD-This is the most important part. Contains detailed information
(clauses).It contains 44 clauses.
• Under new act
Part Applicable To Meaning
Already audited under another (e.g., Companies Act audit
Part A
law exists)
Not audited under any other
Part B Fresh tax audit required
law
Part C Particulars Detailed financial/tax details
Part D Additional particulars Further disclosures
IMPORTANT CLAUSES IN 3CD
Clause No. Topic What it Covers
3 Business Details Nature of business, changes
8 Sec 44AB Applicability Reason for tax audit
11 Books of Accounts Books maintained, location
13 Method of Accounting Cash / Mercantile
18 Depreciation Block-wise details
Cash expenses, personal,
21 Disallowances
penalties
26 Sec 43B Unpaid GST, PF, ESI
32 Losses Carry forward & set-off
34 TDS/TCS Deduction & compliance
Registered vs unregistered
44 GST Details
expenses
CASH DISALLOWANCE AND ALLOWANCE ON
PAYMENT BASIS
1. If a business makes cash payment exceeding ₹10,000 in a day to a person, that
expense is NOT allowed as [Link]-Paid supplier ₹25,000 in cash
2. Certain expenses are allowed ONLY when actually paid before due date of
return not just recorded GST,PF,Bonus,Interest to banks.