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	A pass-through status is a business structure that takes away the obligation to pay corporation tax.</div>
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	An entity usually pays tax twice &mdash; one for the income generated by the firm&#39;s shareholders and another at a corporate level, which is corporation tax.</div>
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	Under the pass-through status, the income generated is taxed in the hands of the investor and that the fund itself does not have to pay tax on the same. Without this, an entity would be subject to double taxation &mdash; paying tax whenever income is generated at the fund level, and then again in the hands of the investor.</div>
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	Examples of pass-through entities include sole proprietorships, S corporations, master limited partnerships, limited liability partnerships, and limited liability companies.</div>
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	This special tax status usually affects most corporations and their shareholders since only the owners are taxed.</div>
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	In 2014, the Union Budget gave a booster to real estate investment trusts (REITs), a pooled vehicle which can be used to invest in real estate, by allowing a pass-through status.</div>
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	Without this, REITs were subject to double taxation &mdash; paying tax whenever income was generated at the fund level, and then again in the hands of the investor.</div>

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What is Pass-through status, Budget News, Pass-through status Definition

Pass-through status

What is Pass-through status?

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	Corporation tax is a direct tax imposed on the net income or profit that enterprises make from their businesses. Companies, both public and privately registered in India under the Companies Act 1956, are liable to pay corporation tax. This tax is levied at a specific rate according to the provisions of the Income Tax Act, 1961.</div>
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	In a major move, Finance Minister Nirmala Sitharaman in September 2019 announced sharp cuts in the corporation tax among a series of announcements. The government decided to slash domestic corporate tax to an effective 25.17 per cent, inclusive of all surcharges and cess, in a bid to promote growth and investments amid an economic slowdown. The move would cost the exchequer Rs 1.45 trillion.</div>
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	The government proposed to reduce the corporate tax rate from the existing 30-25 per cent (depending on the turnover thresholds) to 22 per cent (effective rate 25.17 per cent, including surcharge and cess) for all the domestic companies, subject to them not availing of a specified list of exemptions. These include, among others, exemptions available to units in special economic zones, deductions for certain scientific research expenditure, additional depreciation available on fresh investments and the losses, if any, attributable to such deductions.</div>
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	The minimum alternate tax (MAT), introduced to facilitate the taxation of zero-tax companies, will also not be applicable to companies availing of the reduced rate of taxation.</div>
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	Companies claiming exemptions could continue to avail of them and pay taxes at pre-amended rates, that is, 25-30 per cent. They might opt to pay taxes at lower rates at a future date. However, the option to pay taxes at the reduced rate of 22 per cent, once selected could not be changed. Significantly, where the companies continue to avail of exemptions, the MAT rate has been reduced from 18.5 per cent to 15 per cent.</div>
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	Any new domestic manufacturing company, incorporated on or after October 1, 2019, is to be allowed to pay corporation tax at the rate of 15% (effective rate 17.01%). No MAT is to be imposed on these companies either.</div>
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	Enhanced surcharge will not apply to capital gains on sale of any securities, including derivatives, in the hands of Foreign Portfolio Investors (FPIs).</div>
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	The finance minister also announced an expansion in the scope of corporate-social responsibility (CSR) activities. The companies can now spend 2% of the money on state or Union govt incubators, PSUs, state universities, IITs, public-funded entities.</div>

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What is Corporate Tax, What is Corporation Tax, Corporation Tax News

Corporation Tax

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	An indirect tax is one that is not paid directly by a person to the government but collected by an intermediary and passed on to the government. Indirect taxes are imposed on goods and services on the basis of production, supply, sale or purchase of products or provision of services, in the form of goods and services tax (GST).</div>
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	GST, rolled out in 2017, replaced various indirect tax laws that previously existed in India, such as import and export duty, excise, sales tax, value-added tax (VAT), service tax, entertainment tax, electricity duty, tax on passenger fares, freights etc.</div>
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	<strong>How are indirect taxes collected?</strong></div>
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	An indirect tax is collected from the consumer by an intermediary, such as manufacturer, trader or service provider. The intermediary files a tax return and forwards the tax proceeds to the government with the tax return. The consumer bears the final economic burden of the tax by paying more for the product.</div>
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	By comparison, direct taxes are imposed on persons and collected by the government directly from those on whom they are imposed.</div>
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	In indirect taxation, the obligation of tax payment varies from one consumer to another, as these taxes are levied by the government on goods and services &mdash; not on the income, profit or revenue of an individual. These taxes can be shifted from one taxpayer to another. This is unlike direct taxes, which are borne by the person on whom the tax is levied.</div>
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	<strong>What is GST?</strong></div>
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	GST was rolled out on July 1, 2017, as India&rsquo;s most comprehensive indirect tax reform. It consolidated multiple indirect tax that existed previously into a single one. The implementation of GST aimed to make the indirect tax system more unified across the many states of the country. Read more... (https://www.business-standard.com/about/what-is-goods-and-services-tax)&nbsp;</div>

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