Income tax benifit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 October 2012 whether assessee should go for proprieotrship concern or formed pvt. ltd (become director)so that ultimate tax liability on him will be minimum?

CA Roshan Jha

CA Roshan Jha (Expert)
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27 October 2012 The answer to this question is not straight forward. The calculation depends upon many things.
1) If you go for proprietorship, than the income from that will fall into slab of 10,20 and 30%. However you will be not be eligible for getting deduction for any remuneration received by you.

2) If you go for company, than remuneration will be allowed, however the income will directly be taxable at 30%.

Hence in my opinion, if the Profit is more than 10 lakhs in a year, than you should go for company, otherwise go for proprietorship firm

CA Ganpat Naik

CA Ganpat Naik (Expert)
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27 October 2012 I agree with Expert.

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Adv. R. B. Munot

Adv. R. B. Munot (Expert)
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30 October 2012 Basically it depends on the range of Profit you earning in the business. Higher the profit bracket Pvt. Ltd. company will be beneficial. otherwise proprietary concern will be the option.

I also agree with Mr. Roshan

Querist : Anonymous

Querist : Anonymous (Querist)

30 October 2012 thank you to all