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Corporate Income Tax Computation

Sunder (Business) (165 Points)

05 April 2010

Give me the detailed step by step procedure for computation of Income Tax for a Pvt. Ltd. Co. where the following are involved:

- Income from Main Line of Business

- Short Term Capital Gain from investment in Equity Mutual Funds

- Short Term Capital Gain from investment in Debt Mutual Funds

Can investment in Mutual Funds be treated as another line of business ?

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4 Replies

Amir (Learner) (4016 Points)
Replied 05 April 2010

Dear Sir,

I am not sure what procedure you want in computation. But Tax rate will be as follows(If u meant something else then pls clarify)

Income from main line of business (other then shares/MFs) - Taxable @ 30%

Income from Short Term Gain - Equity MF - Taxable @ 15%

Income from Short Term Gain - Debt MF - Taxable @ 30%

Yes, MF Transactions can be treated as Business if Company is a Trader & not an Investor. Further Business shall not be treated as Speculative since Explanation to Sec 73 applies only to Shares & not in case of Units of MF.

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Sunder (Business) (165 Points)
Replied 06 April 2010

If Mutual Fund income is treated as Business Income will the Tax Computation change ? At what rate ?

If main business is consultancy & short term investment in MF is side business, will it be considered as trading for tax purposes ? Is additional permission is required from RBI or SEBI to do trading ?