What is Business Tax, Property Tax & Corporation Tax?

Business taxation is quite complex for many people. But one explanatory page can answer all your queries. Therefore, we will take a deep dive into what is Corporation tax, what is real estate tax, business tax to make it simple.

What is Business Tax?

To understand what is business tax, you need to first know all the public and private companies registered under the Companies Act 1956 are subject to business taxation.

Whether you are a sole proprietor, in a partnership, or a corporation, a limited liability company, your business must pay taxes on the income. To answer in simple words, what is business tax: we can say that it is business taxation imposed on the companies' net income.

Types of Business/Corporation Tax

There are different business tax types for one to consider. The form of business you are running determines what business tax types you must pay. Therefore, we have mentioned some business tax examples that might prove helpful for you.

• Income Tax
• Goods and Services Tax
• Fringe Benefits Tax
• Land tax
• Payrolls Tax
• Stamp Duty
• Estimated Tax
• Employment Tax
• Excise tax

Eligibility Criteria for business taxation

• A domestic business with a turnover of up to INR 250 Crore must pay a flat rate of 25% business tax.
• For a specific financial year, in case the total revenue earned by your business exceeds INR 1 Crore, then a surcharge business tax of 5% is levied on such a company.
• Domestic businesses also have to pay @4% to Health and Educational Cess.
• In such a case, your domestic business has its overseas branches, and then the same amount of business tax will charge on the wholesome global earnings of such a company.

Business Taxation in such a case of domestic business in India also considers the earnings that your Abroad Domestic Business earns.

What is Business Tax Slab Rate?

The following are the latest slab rates applicable to the domestic business companies as per their turnover:

How to Pay Business Tax?

Here are steps mentioned below to pay Business Tax given below that will prove much helpful to you:

Step 1: Firstly, you have to visit the official website to pay your Business Tax online.

Step 2: Now, Choose the appropriate Challan such as ITNS 281, ITNS 284, ITNS280, ITNS 282, or even Form 26 QB as applicable.

Step 3: Enter your TAN/ PAN details and other compulsory Challan details such as Address, Accounting head via payment made, bank name, etc.

Step 4: After that, A confirmation display will be shown. If your TAN/ PAN is relevant or valid according to ITD PAN/TAN, then the full name according to the master will be shown on your confirmation screen.

Step 5: After completion of confirmation, the taxpayer will be preceded to the bank's net-banking website.

Step 6: Now, the Taxpayer login to the Net-banking website using a user id or password for entering payment details on the website.

Step 7: After a successful payment transaction, a challan counterfoil will show CIN, payment details, and bank name via e-payment as proof of a successful payment transaction.

What is Property Tax?

To understand what is property tax, you need to know that "Property" in this term refers to all land under the responsibility of the individual and incorporates houses, places of business, and premises leased to outsiders. Lighting tax, drainage tax, and water tax are some of the property tax examples.

Now answer to what is property tax; it can be property Tax is defined as the tax paid on property owned by a person or any other legal entity, such as a corporate company.

Types of Property Tax

Generally, the property is categorised into four categories that help government bodies estimate tax criteria for a specific property. Here are four different types of Property Taxes mentioned below:

• Present State of Property Tax
• Intangible Property Tax
• Personal Property Tax
• Land Tax

How to Calculate Property Tax?

The taxation amount of Property Tax is calculated by Municipal authorities as per the assessed value of specific premises. Well, there are three methods that are commonly used to calculate Property Taxes:

• Unit Area Value System
• Rateable Value System
• Capital Value System

Steps to Pay Online Property Tax

Here Steps are mentioned to pay property Tax; in case you are not aware of regarding payment procedure of Property Tax; it might prove helpful for you:

Step 1: Visit the Municipality website and tap on the Property tax option shown on the screen.

Step 2: Now, choose the accurate Property form as per your property category. This form will help you regarding the latest updates that might have been imposed on the category of the property.

Step 3: Now, choose the year of assessment for which you have to pay your tax. It includes the tax of the current financial year along with the dues from your previous years (if any).

Step 4: Enter your Property Identification Number, Property Tax Number, Khata Number, Revenue Survey Number, and even other essential details like relevant locality, owner name, etc.

Step 5: Choose your Preferred Payment modes include Debit Card/ Credit Card, Internet Banking, and even so forth.

What is corporation tax?

Corporation tax is exacted on income acquired by the organisations, regardless of whether domestic or foreign. In 2021 the corporation tax levied on income is 25% on domestic corporate, turning over up to 250 cr. And 30% on turnover of more than 250 cr. For foreign corporates, the tax rate is 40%.

Types of Corporation tax

The companies in India are grouped into 2 classes.

• Domestic corporate: Domestic corporate refers to companies that are incorporated and do businesses in their own country. For example- a company incorporated and doing business in India will be considered a domestic company in India but a foreign company elsewhere.
• Foreign corporate: Foreign corporate refers to companies that conduct business in a country or state other than where it is originally incorporated—for example, a company doing business in India but is incorporated in the USA.

Calculation of corporate tax

Corporate tax is processed on the net income or overall gain of an organisation. In other words, we can say -

Net Revenue is equal to Gross Revenue – (Depreciation + Expenses)

Business taxation can be really confusing and complicated. Therefore, acclimating yourself with documents and necessities and sorting out your records and information can save your time. Also, taxations are essential, and it is meant for our country's citizens' welfare, whether it is business tax, Property tax, or Income Tax.

Also Read:

1) How Do Business Taxes Differ From Personal Taxes?
2) Why Do We Pay Income Tax in India? Importance, Applicability & more
3) Provisions for Income Taxes in India Applicable for Salaried People.
4) OkCredit: All you need to know about OkCredit & how it works.

FAQs

Q. Why do we have to pay Property Taxation?

Ans. Likewise, other taxations, Property Tax, are imposed by governmental bodies to generate public welfare funds. It is compulsory or enforceable taxation by law.

The purpose of paying property tax means helping to pay for facilities that we enjoy in our day-to-day activities like Garbage pickup, Protection services, Roads, Recreations, Fire protection, and even so forth.

Q. How do we calculate Property Tax?

Ans. Property Tax is calculated by multiplying the assessing value of the mill rate. Generally, there are three methods are present to calculate Property Tax i.e.

• Unit Area Value System
• Rateable Value System
• Capital Value System

Q. Does Business Capital include the capital that generates other exempt Incomes?

Ans. Yes, because the capital might also generate taxable business income includes capital gains from stock sales in a unitary corporation which is not included in the combined report with the taxpayer.

Q. Are individuals who rent properties also liable to pay Property Tax?

Ans. Tenants pay their share of taxation via rent paid to the landlord. Otherwise, it is only a landlord’s responsibility to pay the Property Tax.

Q. Do sole proprietors or Partnership firms also have to pay Business Tax?

Ans. If you are running a sole proprietorship or partnership firm, it is advantageous for you not to pay taxes. However, Sole Proprietors can pay taxes on their business incomes via Personal tax returns.