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Definition: Income

An assessment levied by a government on the profits of a company. The rate of corporate income tax paid by a business varies between countries, although since corporations are legal entities distinct from their owners and operators, they are typically taxed as if they were people.

Companies, both private and public which are registered in India under the Companies Act 1956, are liable to pay corporate tax. For the assessment year 2014-15, domestic companies are taxed at the rate of 30%.

In addition to that, surcharge at the rate of 5% is levied if net income is in the range of Rs 1 crore to Rs 10 crore. If the net income exceeds Rs 10 cr, surcharge at the rate of 10% is levied. Education cess of 3% is levied on the sum of income tax and surcharge irrespective of the level of net income.

In the case of foreign companies, royalty or fees received by them in a predefined time-frame are subject to tax at the rate of 50%. Other income or the balance is taxed at the rate of 40%. Surcharge at the rate of 2% is levied if the net income is in the range of Rs 1 cr to Rs 10 cr. If the net income exceeds Rs 10 cr, the surcharge is increased to 5%.

Education cess of 3% is levied on the sum of income tax and surcharge irrespective of the level of net income. Marginal relief is given to both domestic and foreign companies in the case of net income exceeding Rs 1 cr and Rs 10 cr.

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