Corporate sector is the most widely used form of business Organisation particularly for medium and large scale business. Under corporate sector, a business is carried on by floating a company duly registered with appropriate authority.
Corporate taxation refers to taxation of companies (as defined under Income Tax Act, 1961) and is a major source of revenue to the Government. Under Income Tax Act, 1961, a company is liable to pay tax on its income at a flat rate (just as partnership firm) without any basic exemption limit as applicable to an individual or FIUF.
The tax collected from companies (as defined under the Income Tax Act, 1961) is called ‘Company Tax’ or ‘Corporate tax’. It is interesting to note that the proceeds of corporate tax are retained by the Central Government and are not shared with state governments.