I have small company and have profit and intial capital includes around 5cr As per my CA if I close the company and transfer this money to director or promotrs personal account I need to pay flat 30% tax and surcharge etc Is it true Is there any other way to transfer the profit from the company to promotres personal account ?
Hi
If the profits are distributed amongst the shareholders, the same would be taxed as dividend in hands of the shareholders.
If the company is to be closed, this would be the only way out.
However, if you plan to continue the company, the company can pay salaries / professional fees to the directors and taxation would be done accordingly.
Hello taxpayer,
First, when a company is closed down and the available reserves and capital are returned back to shareholders/promoters there are potential income tax implications for both the company and shareholders depending on the mode choosen.
Second I would disagree with the possible mode advised to you presently as it is highly tax inefficient and there are alternate ways to not just bring down this tax liability significantly but even claim a complete exemption if the transaction is structured or planned properly.
Given the multiple aspects of this query, I would advice to have a phone consultation for detailed discussion and precise advice.
Best Regards,
I (Director ) am already 30% income tax slab . If I get a dividend or professional fees ,Still I need to pay 30% tax ?
- How much is the accumulated profits and share capital?
profit is around 4 cr and capital is 65 lakh
If will be considered as dividend and yes it will be more or less taxed at 30%.
We can consult on same as to how you can reduce tax for same.
Hope you find the information helpful if you do please rate it and 5 and provide your valuable feedback for my improvement.
Thank you
Hi,
1. If you get the money in the form of professional fees, then company can claim a deduction of that expense. However, in case of dividend that is not possible.
2. For certain types of professional income, effective tax rate cab be slashed to 15% by opting 44ADA.
- Don't close the company immediately. As the amount is huge, plan to close it within a span of 2-3 years or more.
- Section 44ADA is available upto Rs.50 lacs gross receipts out of which minimum 50% is taxable. No benefit for availing 44ADA.
- You can share company audited balance sheet and Profit & Loss Account for the year 2019 - 20 and trial balance for the year 2020-21 and your ITR/computation for last two years. The facts shared by you are limited. For lawful planning, need more details. Please keep in mind that tax planning should not become tax evasion.
You may consult telephonically and share financials on my e-mail.