LLP vs. Pvt. Ltd Company: Tax-Efficient
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1. Corporate Tax Rates
LLP:
Taxed at 30% (plus surcharge & cess).
Pvt. Ltd:
Lower tax rates (22% under new regime for domestic companies).
2. No DDT for LLP
LLP:
Partners take home profits without extra tax.
Pvt. Ltd:
Dividends are taxable in the hands of shareholders.
3. MAT (Minimum Alternate Tax) Impact
LLP:
Exempt from MAT if total income is below taxable limits.
Pvt. Ltd:
15% MAT applies even if no tax is payable.
4. Tax Benefits & Deductions
LLP:
Can claim business expenses, depreciation, and partner remuneration.
Pvt Ltd:
More tax incentives available under various startup schemes
5. GST & Compliance
LLP:
Simpler GST compliance with fewer filings.
Pvt. Ltd:
More compliance obligations under GST laws.
6. Carry Forward of Losses
LLP:
Losses can be carried forward if no major change in partners.
Pvt. Ltd:
Stricter conditions apply for carrying forward losses.
7. Flexibility in Tax Planning
LLP:
Easy to distribute income among partners for lower tax liability.
Pvt Ltd
: More structured but less flexible in tax planning.
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