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How to Save Tax for a Pvt Ltd Company While ITR Filing Online?

Are you running a Pvt Ltd Company in India and want to save tax? The taxation system of Pvt Ltd Companies is quite complicated, but with proper planning, you can navigate it easily. If your tax planning is effective, it will not just make sure about the compliance with law but also helps in reducing your tax liability. You can save more taxes with the proper understanding of each point of a Pvt Company’s taxation system. As we all know, ITR filing online is essential, but sometimes taxpayers wonder whether the tax saving is legal or not. So, in that case, you don’t need to worry! Tax evasion is illegal, but tax saving is legal. In this blog, we will provide you with some crucial tips on how to save taxes for a private limited company.

But before that, let’s take a quick glimpse at Private Limited Registration

A private limited company is a business entity that has been owned by its shareholders privately and also has limited liability. It has been registered under the Companies Act 2013 and governed under the MCA, i.e. Ministry of Corporate Affairs. It has been considered as a separate legal entity from its owners and is the one of the most popular business structures of the country. To form a private limited company, there will be the requirements of at least two shareholders & 2 directors. Additionally, the general public can’t trade the shares of a Pvt Ltd Registration on any stock exchange. 

Tax Structure of Pvt Ltd Company for ITR Filing Online

Before jumping into the strategies to save tax, you should have proper knowledge about the taxation system of a Pvt Ltd Company in India. Here is the tax structure-

  • Corporate Tax: Private Limited Companies must pay corporate tax at the rate of 25% (in case the company’s turnover does not exceed a specific threshold limit during the previous year). Otherwise, the company is liable to pay the tax at the rate of 30%.
  • Surcharge: The Private Limited Company also needs to pay a surcharge of 7% to 12%, as per the income.
  • Cess: In addition to the corporate tax and surcharge, the Pvt Ltd Companies are also liable to pay a 4% health and education cess.

Tips to Save Tax during ITR Filing Online for Pvt Ltd Companies

There are many ways to save the tax on income tax return filing for a Pvt Ltd Company, but most taxpayers need to be made aware of that. In this section of the blog, we will provide you with some of the major tips that will help you reduce the tax liability of a private company. To get a clear picture, you can also seek the expert advice of ITR Filing Consultants. The tips are as given below-

Salary to the Directors or Founders

  • We all know that the directors of the company will take their share of profits as per the predefined ratio.
  • In order to save tax, the directors or founders of the company can receive the profit as salary instead of dividend. 
  • The Pvt Ltd company can claim the deductions on salary as per the Income Tax Law.

Sitting Fees to Directors

  • The Pvt Ltd Companies can pay the profits to the directors as sitting fees for attending board meetings.
  • This amount should be at most Rs. 1 Lakh per board meeting.
  • The companies can claim this amount as an expense under the Income Tax Law.
  • This amount will also be exempted in the hands of an individual as per the tax law. 

Initial Expenses

  • The founders or directors of the company bear a lot of expenses during the incorporation of the company.
  • These preliminary expenses include professional charges for company incorporation, fees for drafting MOA & AOA, stamp duty, fees paid to ROC and many more.
  • You can save taxes on all such expenses of your company by keeping its proper record in the book of accounts.

Rent Expenses

  • If the place shown as the registered office of the company is in the name of the director or in the name of any relative of the director then you can easily book this expense as rent and can enjoy the tax benefits.
  • You just need to make a rent agreement in the name of owner, start transferring rent, and record it in the book of accounts.

Salary to a Family Member

  • Sometimes family members offer assistance in businesses without any monetary benefit. 
  • As a good tax planner you can keep the record of their salaries in the book of accounts of your company.
  • By doing so you can enjoy the dual tax benefits as your profit will back to the home.

Entertainment Expenses

  • It is the most interesting expense of the business.
  • You must throw a business party or success party or an in-house dinner after each quarter (approx.).
  • You just need to keep the record of this expense in the book of accounts of the company in order to save the tax up to 30%.

Expenses of Director’s Vehicles

  • These are the expenses of the vehicles that have been used by the director of the company for business purposes. It includes attending business meeting or travelling for business.
  • You can save tax on the fuel costs as well as the cost of maintenance & repair of the vehicle. You just need to keep its proper record in book of accounts.

Meeting Expenses

  • If the company has been organized any meeting, then you claim its expenses as per the Income Tax Law.
  • For the growth of the company, their directors socialize, have lot of meetings and visits to several places.
  • You can also save tax on such expenses by keeping its proper record in book of accounts.

Capitalizing Capital Assets & Depreciation

  • If any asset helps you in gaining revenue, then you need to capitalize it.
  • You need to show it in your balance sheet instead of your loss & profit statement.
  • If any expenditure under this will help the company in generating revenues for a long period of time, then you need to book them as fixed asset in the book of accounts.
  • It will offer you the tax benefits to the ultimate years.

These are some of the crucial tips that will help the Private Limited Companies to save tax while ITR Filing Online. If you file Income Tax Return as a Private Limited Company, then you should understand the above mentions points in order to reduce your tax liability. If you still need clarification, you can also seek the professional assistance of ITR Filing Consultants like Legal Pillers. You can find the top professionals by searching CA near me for ITR Filing.

Why Legal Pillers for ITR Filing Online for Pvt Ltd Company?

In today’s competitive era, there are many options available to file Income Tax Return for a Pvt Ltd Company. Legal Pillers is the top choice of the companies for Online ITR Filing. We have a dedicated team with the expertise of ITR Filing. Here are the reasons-

  • Maximize Tax Refunds

Legal Pillers will help you in maximizing your tax refunds by claiming all the deductions available for Pvt Ltd Companies. Our professional team of experts will tell you about all the possible ways that help you in reducing your tax liability.

  • Minimize Stress

With Legal Pillers, you will get the peace of mind. Our team is there to handle everything and reduce your stress, you just stay relaxed. We will make sure about all the possible ways to save tax for Pvt Ltd Company in India.

  • Secure and Reliable

Sometimes, people think that an online platform is not secure. Legal Pillers has a completely secure and reliable online platform, as your privacy is our priority. You can stay calm, knowing that your sensitive information is in safe hands.

  • Save Time and Effort

Our dedicated team of professionals has the exceptional expertise in filing ITR for Pvt Ltd Companies. Our top-notch services will save your time and effort so that you can focus on growing your business.  

These are the reasons why Legal Pillers is the best choice for filing an ITR for a Private Limited Company. You will get the best service with Legal Pillers. You just need to share your query with us, and we will provide you with a solution to all your problems.

Final Words

As we all know that each company has to file ITR before Income Tax Return last date. But if you want an effective tax planning to file Income Tax Return for Pvt Ltd Companies, you need to understand about all the deductions & exemptions available. You can save more tax and reduce your tax liabilities by remembering the above mentioned points. It is advisable to seek the professional assistance of ITR Filing Consultants like Legal Pillers. Legal Pillers has a dedicated team possessing expertise in tax law & regulations related to a Private Limited Company. Don’t forget! Tax planning is not just about saving tax but also about improving the financial health of the company. What are you waiting for? Choose Legal Pillers as your trusted partner and save maximum possible tax for your company. 

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