Running a startup is busy enough without worrying about taxes. But corporation tax is a real cost you can manage if you know the rules. In India, every company that earns profit pays corporate income tax to the government. The rates, exemptions, and filing dates can feel confusing, especially when you’re focused on product development and sales.
Here’s a plain‑English rundown of what you need to know, why it matters, and how to keep more money in your bank instead of the tax department.
Why corporation tax matters for startups
First off, corporate tax directly impacts your bottom line. If you ignore it, you risk hefty penalties, interest, and a damaged reputation that can scare away investors. In Andhra Pradesh, the state follows the central government’s tax rates, but local incentives can lower what you actually pay.
The base corporate tax rate for domestic companies is currently 25% for firms with turnover up to INR 400 crore. New manufacturing units and tech startups may qualify for a 15% rate under the Startup India scheme, provided they meet eligibility criteria like being less than seven years old and having a turnover under INR 25 crore.
Besides the headline rate, you also have to consider surcharge, health & education cess, and any other special levies that the Finance Ministry announces each budget. All of these stack on top of the base rate, so the effective tax can be a few points higher.
Tips to stay compliant and save
1. Keep good books from day one. Use accounting software that tracks income, expenses, and tax‑relevant items. When you have clear records, filing your ITR‑C (Corporate Income Tax Return) becomes a breeze.
2. Claim every allowable deduction. Common write‑offs include depreciation on assets, salaries, rent, utilities, and R&D expenses. If your startup is into software development, the 150% accelerated depreciation on computers and servers can shave off a lot of tax.
3. Use the presumption scheme if you qualify. Small businesses with turnover under INR 50 crore can opt for a presumptive income basis, reporting income at a fixed percentage of turnover. This method cuts down paperwork and often reduces the tax you owe.
4. Take advantage of exemptions. The government offers tax holidays for businesses set up in certain sectors or regions, like the Special Economic Zones (SEZ) or the new AP Innovation Hub. Check whether your startup’s activity lines up with any of these incentives.
5. File on time. The due date for filing the corporate tax return is typically September 30 of the assessment year, but extensions can be granted. Late filing incurs a penalty of 0.5% of tax due per month, up to 10% total.
Finally, don’t try to do everything alone. A qualified chartered accountant can spot deductions you might miss and keep you updated on changing tax laws. Their fee is usually a fraction of the tax you’d otherwise overpay.
Bottom line: corporation tax is a predictable cost, not a surprise. Stay organized, claim deductions, and check for incentives specific to Andhra Pradesh. With a little discipline, you’ll keep your startup’s finances healthy and avoid any nasty tax surprises.
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