B S BHMRA (Managing Partner) (102 Points)
07 January 2011Dear Friends,
1. Which out of the two: A Partnership Firm or A Private Limited Company, is liable for a lower rate of income tax, and will Service Tax also be applicable, in case the activity of the firm/company is to undertake online commodity trading on behalf of it's clients, if it receives a part of the profits earned on behalf of the clients?
Thanks,
rachit jain
(chartered accountant )
(635 Points)
Replied 07 January 2011
both th partnership firm and the private company are chargable to marginal rate of tax i.e 30% plus cess and surcharge.
there is a service tax exemption for assessee whose taxable service in a financial year does not exceed 10 lakhs, but once it exceed this amount the then taxable service provided after 10 lakhs will be chargable to service tax and from the next year onward all the taxable service will be chargeble.
service tax is applicable on the service provided. if the firm/company charging any brokrage or commission on transaction then the service tax is liable but if the firm/company is sharing profit with other then their is no question of service tax raised as it is not a service.
CA Sandeep Kumar
(Audit Assistant)
(804 Points)
Replied 07 January 2011
Taxation are same for a company or a firm.
Yes, service tax is applicable.
Member
(Management)
(325 Points)
Replied 07 January 2011
It is not that easy to answer your question regarding the tax liability of firm and company. Depends on the profits. The remuneration to partners and Directors should be taken into account. Check Section 40 for the allowable remuneration to partners and compare this with Schedule XIII to the Companies Act where remuneration to Directors is dealt with.
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