Company whether Indian or foreign is liable to taxation, under the Income Tax Act,1961
. Corporation tax is a tax which is levied on the incomes of registered companies and corporations.
A Company means:-
- Any Indian company, or
- Any corporate body, incorporated by or under the laws of a country outside India, or
- Any institution, association or a body which was assessed as a company for any assessment year under the Income Tax Act,1922 or was assessed under this Act as a company for any assessment year commencing on or before April 1, 1970,or
- Any institution, association, or body, whether incorporated or not and whether Indian or Non-Indian, which is declared by a general or special order of the Central Board of Direct Taxes to be a company.
Companies in India, whether public or private are governed by the Companies Act, 1956. The registrar of companies and the company law board administers the provisions of the Act.
However, for the purpose of taxation, companies are broadly classified as:-
- Domestic company [Section 2(22A)]:- means an Indian company (i.e. a company formed and registered under the Companies Act,1956) or any other company which, in respect of its income liable to tax, under the Income Tax Act, has made the prescribed arrangement for declaration and payments within India, of the dividends payable out of such income. A domestic company may be a public company or a private company.
- Foreign company [Section 2(23A)] :- means a company whose control and management are situated wholly outside India, and which has not made the prescribed arrangements for declaration and payment of dividends within India.