Finance bill

This query is : Resolved

Guest

Guest (Querist)

11 July 2014 THERE IS NO MENTION OF ONE PERSON COMPANY TAXATION IN THE FINANCE BILL THEN IN WHAT STATUS WOULD THE TAXATION SHALL BE MADE

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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11 July 2014 if its co as per co act n income tax act then it will be assessed as company only.

Rupesh Jain

Rupesh Jain (Expert)
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11 July 2014 it is taxable as company.

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Guest

Guest (Querist)

11 July 2014 IF THAT BE THE CASE WOULD IT BE INFERRED THAT MAT PROVISIONS WOULD APPLY ACCORDINGLY. IF AGREED TO WHY WOULD ONE OPT FOR OPC RATHER PRIVATE LIMITED WOULD BE ON IDENTICAL FOOTING

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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24 July 2024 It seems like you're asking about the applicability of Minimum Alternate Tax (MAT) provisions and the choice between registering as a One Person Company (OPC) versus a Private Limited Company. Let's address each part separately:

### Applicability of MAT Provisions:

MAT is applicable to companies under the Income Tax Act, 1961. Its purpose is to ensure that even if a company reports book profits and pays dividends to shareholders, it also pays a minimum amount of tax to the government. Here’s how MAT typically applies:

- **Private Limited Company:** Most Private Limited Companies are subject to MAT. They need to calculate their tax liability as per normal provisions and also under MAT provisions, and pay the higher amount.

- **One Person Company (OPC):** OPCs are also subject to MAT if their book profits are higher than the MAT threshold. Since OPCs are treated similarly to Private Limited Companies for taxation purposes, MAT provisions apply to them as well.

### Choosing Between OPC and Private Limited Company:

Now, regarding the choice between OPC and Private Limited Company:

- **OPC Advantages:**
1. **Single Member:** OPC allows for single ownership, whereas Private Limited Companies require a minimum of two shareholders.
2. **Less Compliance:** OPCs have lesser compliance requirements compared to Private Limited Companies, making them easier to manage for small businesses.
3. **Limited Liability:** Both OPCs and Private Limited Companies offer limited liability protection to their owners, shielding personal assets from business liabilities.

- **Private Limited Company Advantages:**
1. **Greater Credibility:** Private Limited Companies often have greater credibility in the eyes of investors, customers, and suppliers due to stricter regulatory requirements.
2. **Potential for Growth:** Private Limited Companies can easily accommodate more shareholders, making it easier to raise capital through equity funding.
3. **Flexibility in Operations:** Private Limited Companies have more flexibility in terms of operations, governance, and structuring compared to OPCs.

### Identical Footing in MAT Context:

When it comes to MAT, both OPCs and Private Limited Companies are treated similarly because both are corporate entities under the Income Tax Act. Therefore, the decision to choose between OPC and Private Limited Company should primarily consider factors like ownership structure, long-term business goals, compliance burden, and the need for external funding.

### Conclusion:

While both OPCs and Private Limited Companies are subject to MAT provisions if applicable, the choice between them should be based on your specific business needs and growth objectives. Consider consulting with a tax advisor or legal expert who can provide personalized advice based on your circumstances and future plans for the business.