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Corporate tax is a sort of tax that is levied against the net profit and income that businesses generate from their commercial activities. Both local and foreign businesses are subject to corporate taxes under the Income Tax Act of 1961. Through this Act, the Indian government requires domestic businesses to pay corporation taxes based on their overall income. Foreign businesses, on the other hand, are only subject to taxation on income earned or received within India.

A corporation is a company that has been granted state approval to function apart from its stockholders and as a single legal entity. The Income Tax Act divides corporations into two categories: domestic companies and foreign companies for the purposes of determining the corporate tax rate in India. Domestic Company Foreign Company Comparison Factors These companies are registered under the companies act of India. These businesses are not registered with the Indian Companies Act. Registration Status Economic transactions occur within the defined location boundaries of India. Economic transactions occur in some countries across the globe. Area of Operations Domestic company has a single currency. Foreign Company deals in multiple currencies. Currency Usage

Domestic corporations and international corporations both pay tax in India, although at various rates depending on the type of company. Further, the corporation tax rate varies based on a slab rate structure depending on the type of corporate organization and the various revenues made by each of them. Currently, India's company tax rates for the 2019–2020 assessment year are as follows: Types of company Corporate tax rate Surcharge on net income less than 1 Cr. Surcharge on Net Income greater than Rs. 1 Crore and less than Rs. 10 Crore Surcharge on Net Income greater than Rs. 10 Crore Domestic with annual turnover up to Rs 250 Cr 25% Nil 7% 12% Domestic Companies 30% Nil 7% 12% Foreign Companies 40% Nil 2% 5%

A domestic company’s origin is in India with its management within India. In simple words, a company is defined as a domestic company when it is registered under the companies act of India and the whole management operates in India. If we look at the relevant corporate tax rates for the annual year 2019-20 which are as follows- Tax Rates Gross Turnover 25% Up to 250 Cr. 30% More than 250 Cr. A domestic corporate entity with a turnover of up to 250Cr. Was required to pay the flat rate of 25%. If a company's net revenue for a given fiscal year exceeds Rs. 1 crore, a corporate surcharge tax of 5% is applied to that firm. A Health and Educational Cess at 4% is also charged for a domestic company. If a particular domestic company has its branches overseas, then the same amount of corporate tax is also charged on the total global earnings of such a company. Corporate tax in the case of domestic companies in India also considers the revenue that is earned by a domestic company abroad.

Any company which is not registered under the company act of India is defined as a foreign company. The origin of such companies is out of India. It takes control of its management outside of India. The taxation system on foreign entities is quite different than the taxation on Indian companies. Majorly it all relies on the understanding between India & other countries. Following are the tax slab rate for AY 2022-23. Tax Rate Nature of Income 50% Any royalties or fees for technical services that a foreign corporation receives from the state or any Indian company pursuant to a contract that was signed before April 1, 1976, and was endorsed by the national government 40% On other income

We know that there are various taxes levied on corporations. But there are some provisions also for corporate tax rebates and deductions. Major of them are as follows- Corporate entities are not taxed on their capital gains. Dividends can also be assessed as tax rebates with relevant terms and conditions. The corporate entity has the authority to carry the losses incurred in the business for a maximum of 8 years. A corporation may be eligible for various deductions if it installed new infrastructure or power sources. Certain amounts of deductions are available to the corporate for exports and new undertakings of a corporate. Various provisions for deductions are available in case the corporate wants to venture capital enterprises or funds. In case, any domestic corporation is receiving any amount of dividends from other domestic corporates, they can have the deductions under the provision of dividends as rebates.