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Proprietorship vs LLP vs Private Limited Tax Calculator

Compare total tax, founder pay tax and post-tax cash as a proprietorship, an LLP or a private limited company.

Reviewed by CA Apurav GargUpdated Calculated in your browser; copied links include your figures

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Note:
Example values — replace with yours.

Operating profit for the year, before any salary or remuneration to the founders.

Partner remuneration in an LLP, or director salary in a company. A proprietor cannot deduct pay to themselves.

The pay is split equally between them.

Private Limited only. Dividends are taxed again in the founders’ hands at their slab rates. 0 keeps the profit in the company.

Advanced options

Interest at 12% a year is deducted before the partner pay limit, and taxed in the partners’ hands. Blank or 0 if none.

Yearly compliance and audit cost, your own estimates (₹)

Accounting, audit and annual filings. Taken off the cash left only; blank means none.

Your result

Lowest total tax: Private Limited

₹17,01,908.00

Lowest total tax of the three is as a Private Limited, 21.3% of the profit. The highest is ₹22,65,120.00.

Proprietorship
₹22,65,120
LLP
₹20,59,200
Private Limited
₹17,01,908
Tax by structure
ItemProprietorshipLLPPrivate Limited
Founder pay deducted from business profit—₹24,00,000.00₹24,00,000.00
Taxable profit in the business₹80,00,000.00₹56,00,000.00₹56,00,000.00
Tax on the business₹22,65,120.00₹17,47,200.00₹14,09,408.00
Founders’ personal tax on their pay—₹3,12,000.00₹2,92,500.00
Total tax₹22,65,120.00₹20,59,200.00₹17,01,908.00
Effective rate on profit28.3%25.7%21.3%
Post-tax cash (business and founders together)₹57,34,880.00₹59,40,800.00₹62,98,092.00
Cash left in the business vs cash the founders can take out
After the business’s own taxProprietorshipLLPPrivate Limited
Profit left in the business after its tax—₹38,52,800.00₹41,90,592.00
Founders can take out without more taxAll of it₹38,52,800.00—
Paid out as dividend (taxed in the founders’ hands)——₹0.00
Tax on that dividend——₹0.00
Cash left in the company—₹0.00₹41,90,592.00

An LLP’s profit share is exempt in the partners’ hands once the LLP has paid its tax. A company’s profit reaches the founders only as salary or dividend, and a dividend is taxed again at their slab rates.

Note:

Director salary sweet spot: ₹20,75,000.00 per director

Up to this salary, each extra rupee paid to a director is taxed at no more than the company’s 25.2%; above it, the director’s marginal rate is higher than the company’s. You have entered ₹24,00,000.00 per director. A salary must still be reasonable for the work done.

What this tells you

The same profit is taxed differently as a proprietorship, an LLP or a private limited company, and founder pay is treated differently in each.

Enter the year’s profit before founder pay, what the founders draw, and how many share it, to compare the total tax and the cash left in each structure.

Assumptions used

  • Individuals are taxed under the default new regime, with no other income and no deductions.
  • Directors get the salaried standard deduction of ₹75,000; proprietors and partners do not.
  • Founder pay is split equally between the founders.
  • An LLP partner’s share of profit after tax is not taxed again in their hands.
  • The company pays the concessional rate. It keeps its profit unless you enter a dividend payout share; a dividend is added to each director’s income and taxed at slab rates.
  • Surcharge on the tax on dividends is capped at 15%; where the dividend is part of a larger income, its share of the tax is taken in proportion to income.
  • Interest on partner capital, if entered, is at 12% a year, never more than the profit.
  • Compliance and audit costs are your own estimates and are taken off the cash left only, not off taxable profit.
  • Figures are for one year and ignore advance-tax interest, MAT/AMT, losses carried forward, and TDS on dividends or partner payments (a timing difference, not an extra cost).
Legal references and sources
Entity tax comparison rates
Income-tax Act, 2025 (for tax year 2026-27 onwards) and Income-tax Act, 1961 (for FY 2025-26): default New Tax Regime individual slabs and standard deduction; LLP 30% rate and partner remuneration ceiling (90% up to ₹6,00,000 or ₹3,00,000 whichever is higher, and 60% on balance book profit); domestic company concessional tax regime (22% base + 10% surcharge + 4% cess = 25.168%).
Last verified 27 Oct 2026
LLP: interest on partner capital, maximum rate a year
Interest on partner capital is deductible for the firm up to 12% a year (simple interest), if the LLP agreement authorises it: section 40(b)(iv) of the Income-tax Act, 1961; section 35 of the Income-tax Act, 2025 from 1 April 2026. Verified as on 2 November 2026.
Last verified 2 Nov 2026 · Official source
Highest surcharge on tax on dividends (individuals)
Surcharge on the tax on dividend income is capped at 15% for individuals: First Schedule to the Finance Act (Part I and Part III); Income-tax Act, 2025 from 1 April 2026. Verified as on 2 November 2026.
Last verified 2 Nov 2026 · Official source

How this is calculated

  1. Individual tax: slab tax on taxable income; nil up to ₹12,00,000 under the rebate, with marginal relief just above it; surcharge with marginal relief; then 4% cess.
  2. Proprietorship: individual tax on the whole profit.
  3. LLP capital interest = the lower of profit and partner capital × 12%. Book profit = profit − that interest.
  4. LLP: deductible pay = the lowest of book profit, pay drawn and the partner limit on book profit. Firm tax = 30% of the remaining profit (plus surcharge over ₹1,00,00,000) and cess. Add each partner’s individual tax on their pay and capital interest.
  5. Private Limited: company tax = 25.2% of profit after director pay. Add each director’s individual tax on salary after the standard deduction, plus their share of any dividend.
  6. Dividend = (profit after director pay − company tax) × payout share. Cash left in the company = the rest.
  7. Salary sweet spot = the top of the last slab whose rate, with surcharge and cess, is no more than the company rate, plus the standard deduction.
  8. Post-tax cash = profit − total tax − any compliance cost you enter.

Terms used here

Worked examples

Example: ₹80,00,000 profit, ₹24,00,000 founder pay, 1 founder

  • Proprietorship: slab tax ₹19,80,000.00 + surcharge ₹1,98,000.00 + cess ₹87,120.00 = ₹22,65,120.00 (28.3%); cash ₹57,34,880.00.
  • LLP: limit ₹49,80,000.00, so all ₹24,00,000.00 is deductible. Firm tax on ₹56,00,000.00 is ₹17,47,200.00; the partner’s tax is ₹3,12,000.00. Total ₹20,59,200.00 (25.7%); cash ₹59,40,800.00.
  • Private Limited: company tax on ₹56,00,000.00 is ₹14,09,408.00; the director’s tax on ₹23,25,000.00 after the standard deduction is ₹2,92,500.00. Total ₹17,01,908.00 (21.3%); cash ₹62,98,092.00.

Example 2: the same business, taking all the company’s profit out as dividend

  • Kept in the business, the company and director pay ₹17,01,908.00 against the LLP’s ₹20,59,200.00. But the LLP’s profit after its tax, ₹38,52,800.00, can be taken out with no more tax; the company’s ₹41,90,592.00 is still inside it.
  • Paid out as dividend: the director’s taxable income becomes ₹23,25,000.00 + ₹41,90,592.00 = ₹65,15,592.00, and personal tax rises to ₹17,55,671.17 — ₹14,63,171.17 more.
  • Total Private Limited tax ₹31,65,079.17: the LLP is lower by ₹11,05,879.17 when all the profit is taken out.
  • Director salary sweet spot: ₹20,75,000.00 a director. Up to there the director’s marginal rate is no more than the company’s 25.2%; above it, it is higher.

Our Entity Structuring work covers choosing and setting up the structure, and converting an existing business.

Questions sellers ask

Why can a proprietor not deduct a salary to themselves?

A proprietorship is not separate from its owner, so the whole profit is the owner’s income and is taxed at individual slab rates, whatever is drawn.

How much partner remuneration can an LLP deduct?

Up to a limit on book profit: 90% of the first ₹6,00,000 (at least ₹3,00,000), and 60% of the rest. It must be paid to working partners and allowed by the LLP agreement. Anything above the limit is taxed in the LLP.

What company tax rate is used?

The concessional rate for domestic companies that give up most deductions and exemptions: 22% plus 10% surcharge and 4% cess, 25.2% in all.

Does this include tax on dividends?

No. The Private Limited column assumes the profit after tax stays in the company. Paying it out as a dividend is taxed again in the shareholders’ hands, which this tool does not add.

What else matters when choosing a structure?

Raising equity from investors usually needs a company, compliance costs and audits differ, and liability, ownership changes and exit routes all vary. Tax is one input, not the whole decision.

Want our team to look at these numbers alongside your books?

We keep books, file GST and TDS returns and prepare monthly MIS for D2C and marketplace sellers. Share your figures and we will walk you through what we find.

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Disclaimer

An estimate for general information only, based on the figures you enter and simplified assumptions. The right structure depends on your plans, investors and facts; this is not advice on which structure to choose.

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