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Businesses liable for income tax must obtain a
tax identification card and number [known as Permanent
Account Number (PAN)] from the Revenue Department:
The following persons should apply for allotment of
permanent account number in Form No. 49A
- If income exceeds exemption limit or turnover
exceeds Rs. 5,00,000.
- Charitable trust
- Person specified by the Central Government
In addition to this, businesses liable to withhold
tax must necessarily obtain a Tax Deduction Account
Number (TAN). Both the PAN and the TAN must be indicated
on all the returns, documents and correspondence filed
with the Revenue Department.
Currently, domestic companies are taxable at the rate
of 33.66% (inclusive of surcharge of 10% plus education
cess 2% thereon) on its taxable income. Foreign
companies are taxed at a marginally higher rate of
41.82% (including surcharge of 2.5% and education cess
2% thereon). However, in case where the income tax
liability of the company under the provisions of the
domestic tax laws works out to less than 7.5% of the
book profits (derived after making the necessary
adjustments), a Minimum Alternate Tax of 8.415%
(including a surcharge of 10% plus education cess 2%
thereon) on the book profits, would be payable. Domestic
companies are required to pay a dividend distribution
tax of 14.025% (including surcharge of 10% plus
education cess 2% thereon) on the dividends distributed
during the year.
Companies are required to withhold tax under the
domestic law from certain payments including salaries
paid to employees, interest, professional fee, payments
to contractors, commission, winnings from games /
lottery / horse races etc. Moreover, taxes have to be
withheld from all payments made to non-residents at the
lower of rates specified under the domestic law or under
the applicable tax treaty, if any.
Net wealth on “Valuation date” is chargeable to
wealth tax in the immediately following assessment year.
Only an individual, HUF, and a Company is chargeable to
wealth-tax.
By virtue of section 45, no wealth tax is chargeable
in respect of net wealth of –
- any company registered under section 25 of the
Companies Act, 1956
- any cooperative society
- any social club
- any political party; and
- a Mutual fund specified under section 10(23D) of
the Income Tax Act.
Net wealth in excess of Rs. 15,00,000 is chargeable
to wealth-tax @ 1%
Valuation date for the purpose of Wealth Tax: March
31 immediately proceeding the assessment year.
Net Wealth: The term “Net Wealth” means taxable
wealth. Broadly speaking, it represents the excess of
assets over debts. Assets include deemed assets but do
not include exempt assets.
Tax Rates: Assessment Year 2006-07
| Assessee |
Tax Rate |
| Exempt |
10% |
20% |
30% |
Surcharge |
Education
Cess |
| Woman |
137000 |
137001 to
150000 |
150001 to
250000 |
250001 and
Above |
10% on the
excess of income over Rs. 1000000 |
2% |
| Senior
Citizen |
185000 |
NA |
185001 to
250000 |
250001 and
Above |
10% on the
excess of income over Rs. 1000000 |
2% |
| Other
Individual / HUF / AOP / BOI |
100000 |
100001 to
150000 |
150001 to
250000 |
250001 and
Above |
10% on the
excess of income over Rs. 1000000 |
2% |
| Domestic
Companies |
NA |
30% |
10% |
2% |
| Foreign
Companies |
NA |
40% |
2.5% |
2% |
| Firm |
NA |
30% |
10% |
2% |
| Co-operative
Society |
NA |
0 to 10000 |
10001 to
20000 |
20001 and
Above |
- |
2% |
| Local
Authorities |
NA |
30% |
- |
2% |
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