What is Corporate Income Tax (India)?
India levies Corporate Income Tax on the net profits of companies registered under the Companies Act 2013. The headline rate for domestic companies is 30%, but the effective rate for most companies is 22% under the concessional Section 115BAA regime (plus 10% surcharge and 4% cess = ~25.17%). New manufacturing companies incorporated after 1 October 2019 and commencing production before 31 March 2024 can opt for 15% under Section 115BAB (plus surcharge and cess = ~17.01%).
Current Rate (FY 2025-26 (AY 2026-27))
22% base (Section 115BAA, most companies); 15% base (Section 115BAB, new manufacturing); 30% base (companies not opting for concessional rates). Plus 10% surcharge on base tax and 4% health and education cess on tax plus surcharge.
Example
A Private Limited company with INR 50 lakh net profit opting for Section 115BAA pays 22% = INR 11 lakh base tax, plus 10% surcharge = INR 1.1 lakh, plus 4% cess = INR 48,400. Total tax = INR 12,54,400, giving an effective rate of ~25.08%.
How Corporate Income Tax (India) works in India
Corporate Income Tax in India is administered by the Central Board of Direct Taxes (CBDT) under the Income Tax Act 1961. All companies resident in India (incorporated under Indian law or managed and controlled in India) pay tax on their worldwide income. Foreign companies pay tax only on India-sourced income.
**Rate structure for domestic companies**
The tiered rate structure depends on which regime the company opts for:
- **Section 115BAA (most companies):** 22% base rate, available to all domestic companies from AY 2020-21. No MAT applies. The company forgoes most deductions/exemptions (80IC, 80IB etc.) but retains 80JJAA (additional employment deduction) and depreciation under Section 32. Effective rate ~25.17% after 10% surcharge and 4% cess.
- **Section 115BAB (new manufacturing):** 15% base rate for companies incorporated after 1 October 2019 commencing production before 31 March 2024 (extended to 2025 for certain cases). No MAT. Effective rate ~17.01%.
- **Old regime (30%):** Allows all deductions under Chapter VI-A and incentives. MAT at 15% of book profit applies. Effective rate for turnover above INR 400 crore can reach ~34.94% after 12% surcharge and 4% cess.
**Surcharge rates**
- Domestic companies: 7% on base tax if net income between INR 1 crore and INR 10 crore; 12% if net income above INR 10 crore - Companies under Section 115BAA/BAB: 10% flat surcharge regardless of income level
**Health and Education Cess:** 4% on tax plus surcharge (replaces the old 3% cess)
**MAT (Minimum Alternate Tax):** Companies under the old 30% regime pay at least 15% of book profit (before tax) if their regular tax liability is lower. MAT credit can be carried forward for 15 years. Companies opting for Section 115BAA/BAB are fully exempt from MAT.
**Filing:** Companies file ITR-6 annually by 31 October (if subject to transfer pricing audit or specified domestic transactions: 30 November) via the Income Tax portal (incometax.gov.in). Advance tax instalments are due quarterly.
**Transfer pricing:** Indian entities in multinational groups must maintain Form 3CEB (Chartered Accountant certificate) for international transactions and specified domestic transactions. ALP (arm's length price) rules under Section 92 apply.
Related terms
Advance Tax requires businesses and individuals with tax liability above INR 10,000 in a financial year to pay tax in four instalments during the year — not in a lump sum at filing. The instalment due dates are 15 June (15%), 15 September (45%), 15 December (75%), and 15 March (100% of assessed tax for the year). Failure to pay results in interest under Sections 234B and 234C.
ITR-6 is the Income Tax Return form applicable to all companies registered under the Companies Act 2013 (and foreign companies) that do not claim exemption under Section 11 (religious/charitable trusts). It must be filed electronically by 31 October of the assessment year (30 November if the company has international/specified domestic transactions subject to transfer pricing audit). The return must be verified using Digital Signature Certificate (DSC) of a director.
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