Corporate Tax Structure

• An OPC is treated as a separate legal entity and taxed as a domestic company under the Income Tax Act, 1961.
  
• It is subject to a flat corporate tax rate, which can be 22% under the new tax regime (plus surcharge and cess).
  
• This structure differs from sole proprietorships, which are taxed based on individual slab rates.
  
• OPC taxation promotes structured compliance and predictable tax liability.
  
• Dividends paid to the member are taxed in their hands, as the Dividend Distribution Tax (DDT) has been abolished.
  

Advance Tax and Filing Obligations

• OPCs must estimate and pay advance tax during the year if their total tax liability exceeds ₹10,000.
  
• The annual income tax return (ITR-6) must be filed, regardless of profit or loss.
  
• Delay in tax payment or filing leads to interest, penalties, and disallowance of expenses.
  
• Accurate record-keeping and timely submissions are essential to avoid scrutiny.
  
• Tax filing is done in the name of the company, not the individual owner.
  

Expense Deductions and Tax Planning

• OPCs can claim deductions for business-related expenses, such as salaries, rent, depreciation, and utilities.
  
• These deductions help in reducing the taxable profit, lowering the overall tax burden.
  
• Remuneration to the director-member, if structured properly, is also deductible.
  
• Depreciation on assets and carry-forward of losses provide long-term tax planning advantages.
  
• Unlike individuals, OPCs enjoy structured rules for expense allowances.
  

TDS and Withholding Compliance

• OPCs are required to deduct Tax Deducted at Source (TDS) on specified payments like salaries, rent, and professional fees.
  
• TDS compliance includes deduction, deposit, and filing of quarterly returns.
  
• Non-compliance can attract interest, penalty, and disallowance of corresponding expenses.
  
• A valid TAN (Tax Dedication Account Number) is required to fulfill these obligations.
  
• Timely compliance ensures smooth assessment and avoids regulatory issues.
  

GST and Indirect Tax Considerations

• OPCs must register under GST if their turnover exceeds the prescribed threshold (₹20 lakh in most states).
  
• GST filing and payment become applicable based on the nature of goods/services and operational location.
  
• GST collected must be remitted, and input tax credit (ITC) can be claimed on eligible business inputs.
  
• Indirect tax compliance adds to operational transparency and supports input recovery.
  
• Failure to comply with GST rules can lead to financial penalties and blockage of credits.