44AD for both company and director/partner
I'm currently earning around 60L per annum as an unregistered sole proprietor and I'm filing my taxes using 44AD(6% of the gross income as my business is digital marketing). Everything is fine on that front until now. And I want to continue filing this income under 44AD in the coming years.
But in the coming weeks, I want to start a company (Partnership Firm or LLP or Pvt Ltd) with a friend of mine with a professional office setup. This company has no connection with my current business and so, I would continue to earn 60L individually. I read somewhere that if I go with registering a Pvt Ltd company, directors of pvt ltd company can't use 44AD section. Is that true? Which type of company would be best suitable for my needs, which is to let me file my current business to be filed under 44AD? It'd also be an advantage if the company can file their taxes under 44AD or at the least possible tax rates. But the taxation of the company is only a second preference. I don't want to start a company and start paying 30% of the 60L I earn just because of that.
Asked 1 year ago in Income Tax
Thank you Naman, Lakshita, Hunny, Karishma, and Ruchi. Looks like Pvt Ltd being a considerable option is back on. I understand that I can continue doing my taxation using 44AD for my current individual business income. But what about the salary I draw from the new company that I'm going to form?
Consider a scenario where the gross income of the company(Pvt Ltd or LLP - I haven't decided yet) is 50L. I and my partner withdrew 15L each as a remuneration/salary. So 20L net profit for the company, considering there is no other expenses.
The tax amount if I go with registering a Pvt Ltd will be 25% of 20L and that of LLP would be 30%+cess of the 20L, right?
And what about the 15L salary I withdraw? Will I be paying 15L according to usual tax slabs or can I go for 44ADA (50% of remuneration as net profit) if I choose Pvt Ltd or LLP?
Asked 1 year ago