Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
The headline rates
The structures are taxed differently. A company pays a flat corporate rate — around 25% for small companies, 22% under the concessional regime (Section 115BAA, no incentives), or 15% for eligible new manufacturers — plus surcharge and cess. An LLP or partnership pays a flat 30%. A proprietorship is taxed at your personal slab rates. Confirm current rates per the Finance Act.
Rates aren't the whole story
Two things complicate the headline: an LLP/partnership can deduct partner remuneration and interest (within Section 40(b)) before the 30%, cutting the effective burden; and a proprietorship at modest income pays far less than any flat rate because of the slab and basic exemption. A company‘s low rate is offset by heavier compliance and tax again when profits are taken out as salary or dividend.
A worked example
Example: a consultant earning ₹15 lakh profit pays the least as a proprietor (slab, with deductions) — a company would tax it at ~25% and again on withdrawal. But a business earning ₹2 crore and retaining profits to reinvest may prefer the 22% company rate. So ‘most efficient’ flips with scale and whether you withdraw profits. Our team can model the structures on your numbers.