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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