Corporate Tax Rates in India: Tax Rates & Rules

Understanding the corporate tax rate in India directly affects how you structure your entity, plan cash flow, and stay compliant from day one. India’s tax system offers multiple regimes, each with different rates, conditions, and trade-offs.

If you are entering India or scaling operations here, you are dealing with:

• Multiple tax rate options (15%, 22%, 25%, 30%)
• Additional layers like surcharge and cess
• Compliance requirements like audits, filings, and advance tax

India also follows a financial year from April 1 to March 31, and companies must align their filings and payments accordingly.

This guide covers everything, from rates to filing to incentives, so you can operate in India with clarity, alongside support from Commenda to further simplify the process.

What Is the Corporate Tax Rate in India?

India does not have a single flat corporate tax rate. The applicable rate depends on the type of company, its turnover, and the tax regime it chooses. Current rates remain consistent with the Finance Act 2024.

The 22% rate under Section 115BAA applies to companies that give up certain deductions and exemptions and cannot be reversed once chosen. The 15% rate under Section 115BAB applies to eligible new manufacturing companies that meet the incorporation and production conditions.

Breakdown of Corporate Income Tax Components

The corporate income tax rate in India, as shown on paper, is not the final amount a company pays. The actual tax depends on multiple components added on top of the base rate.

1. Base Corporate Tax Rate

This is the starting point. Domestic companies may be taxed at 15%, 22%, 25%, or 30%, depending on the regime selected. The chosen regime also affects eligibility for deductions and incentives.

2. Surcharge

This is an additional tax applied to the income tax amount when profits cross certain thresholds. For most companies, the surcharge ranges from 7% to 12%, while companies under concessional regimes (115BAA/115BAB) are subject to a flat 10% surcharge.

3. Health and Education Cess

A 4% cess is applied on the total of income tax plus surcharge. This is mandatory across all regimes and increases the effective tax rate.

4. Minimum Alternate Tax (MAT)

MAT applies at 15% of book profits if the regular tax is lower. It does not apply to companies under concessional regimes like 115BAA and 115BAB.

Each of these components affects the final corporation tax in India, so considering all of them is necessary for accurate tax calculation.

Corporate Tax Filing Requirements in India

Corporate tax filing in India is digital but requires accurate data, proper documentation, and timely submission. Companies must ensure that all forms, reports, and payments are correctly aligned to avoid penalties.

Key requirements for corporate tax filing in India:

• Income Tax Return (ITR-6): Most companies file their tax returns using ITR-6, which includes income details, tax calculations, and required disclosures.
• Tax Audit Reports (if applicable):mCompanies that meet certain thresholds must submit audit reports using Form 3CA and Form 3CD to validate their financials and tax positions.
• Transfer Pricing Documentation: If the company has international or specified domestic transactions, it must file Form 3CEB along with transfer pricing documentation.
• Regime Selection Forms: Companies choosing concessional tax rates need to file:
  • Form 10-IC (for 22% regime under Section 115BAA)
  • Form 10-ID (for 15% regime under Section 115BAB)
• Foreign Tax Credit Reporting (if applicable): Companies earning income outside India must file Form 67 to claim the foreign tax credit.
• Supporting Financial Records: This includes financial statements, tax calculations, advance tax payment proofs, and reconciliation with Form 26AS and AIS.

Accurate and timely filing is important, as delays or errors can lead to interest, penalties, or loss of tax benefits. Keeping your documents organized makes compliance much easier throughout the year.

Tax Year and Payment Deadlines in India

India follows a structured tax calendar, and staying aligned with it is critical for timely compliance and avoiding penalties.

1. Tax year structure

India’s tax year runs from April 1 to March 31. The “previous year” is when income is earned, and the “assessment year” is when that income is reviewed and taxed. This structure remains consistent across filings and compliance.

2. Corporate tax filing deadlines

Most companies must file their tax returns by October 31 of the assessment year. If transfer pricing applies (Form 3CEB), the deadline is extended to November 30. Filing on time helps avoid penalties and ensures smooth compliance.

3. Advance tax payment schedule

If a company’s tax liability exceeds ₹10,000, it must pay advance tax in installments:

• June 15 → 15%
• September 15 → 45%
• December 15 → 75%
• March 15 → 100%

Any tax paid up to March 31 is treated as advance tax and is paid using Challan ITNS 280.

4. Late filing and corrections

If the deadline is missed, companies can still file a belated return within the allowed time. An updated return can also be filed within 48 months, subject to conditions. However, delays may lead to interest and penalties.

5. Loss carry-forward rules

To carry forward business or capital losses, returns must be filed within the original due date under Section 139(1). Missing this deadline means these losses cannot be carried forward.

Keeping track of these timelines ensures smoother corporate tax filing in India and helps avoid unnecessary penalties or compliance issues.

Withholding Taxes and Other Business Taxes in India

Corporate taxation in India includes withholding tax and indirect taxes alongside income tax.

Withholding Taxes (TDS)

Withholding tax, or Tax Deducted at Source (TDS), applies to specific payments such as dividends, interest, and royalties, especially in cross-border transactions.

• Dividends and Interest: Typically subject to around 10% withholding tax for residents, while non-residents may face higher rates, often around 20%, depending on the nature of income.
• Royalties and Technical Services: Rates generally range from 2% to 10% for residents and can go up to 20% for non-residents, before considering surcharge, cess, or treaty benefits.
• Impact of Tax Treaties (DTAA): If a Double Taxation Avoidance Agreement applies, companies may benefit from lower withholding tax rates, provided they meet eligibility conditions.
• Compliance Requirement: Businesses are responsible for deducting and depositing TDS on time, along with filing relevant returns, making it a critical part of ongoing compliance.

Other Business Taxes in India

In addition to corporate income tax in India, companies must account for other taxes that affect operations and transactions.

• Goods and Services Tax (GST): Applies to the supply of goods and services, with rates typically ranging from 5% to 28%, and 18% being the most common rate across categories.
• Capital Gains Tax: Gains from the sale of assets are taxed separately:
  • Long-term capital gains → ~12.5%
  • Short-term capital gains → Taxed at applicable rates
• Other Indirect Taxes and Levies: Certain sectors may also attract additional levies, such as compensation cess under GST or industry-specific charges, depending on the nature of goods or services.

These taxes affect overall liability, so planning should go beyond just the corporate tax rate in India.

Corporate Tax Incentives, Deductions, and Exemptions

India’s tax framework includes several incentives aimed at encouraging investment, manufacturing, and startup growth. The right combination of these benefits can significantly reduce your overall tax liability if applied correctly.

Key incentives to know:

• Lower Tax Rate for Existing Companies (Section 115BAA): Companies can opt for a 22% tax rate (plus surcharge and cess) by giving up certain deductions. This option is irreversible and removes the need to pay MAT.
• 15% Tax Rate for New Manufacturing Companies (Section 115BAB): New manufacturing companies can benefit from a 15% tax rate (plus 10% surcharge and 4% cess). The company must be incorporated on or after October 1, 2019, and start production by March 31, 2024.
• Startup Tax Holiday (Section 80-IAC): Eligible startups can claim a 100% profit deduction for 3 consecutive years within their first 10 years. The startup must be DPIIT-recognized and incorporated between April 1, 2016, and March 31, 2025.
• Carry Forward of Losses: Companies can carry forward business losses for up to 8 years to offset future profits.

Choosing the right mix of tax rates and incentives is a strategic decision, one that depends on your business model, growth plans, and long-term tax position.

International Tax Treaties and Double Taxation Avoidance

India has a wide network of Double Taxation Avoidance Agreements (DTAAs) to prevent the same income from being taxed in more than one country.

For companies with cross-border income, DTAAs affect:

• Withholding tax rates → Lower rates on dividends, interest, and royalties.
• Foreign tax credits → Claim credit for taxes paid abroad.
• Permanent establishment (PE) rules → Determine taxable presence in India.
• Tax treatment of cross-border income

Reporting requirements

To claim treaty benefits:

• Form 67 → Report foreign income and claim tax credit
• Must be filed before the ITR deadline under Section 139(1)

Transfer pricing compliance

For international transactions:

• Form 3CEB must be filed under Section 92E
• Due one month before the tax return deadline

For businesses operating across borders, understanding treaty benefits and meeting reporting requirements is essential to avoid double taxation and ensure smooth global operations.

How Commenda Supports Corporate Tax Compliance in India

Corporate tax compliance in India involves more than just applying the correct tax rate. It requires timely filings, accurate reporting, and keeping track of ongoing requirements.

Commenda helps simplify this by bringing all compliance tasks into one place and giving you clear visibility across your operations.

Commenda supports you with:

• Corporate tax return preparation and filing coordination: Consolidate financial data, manage documentation, and track deadlines to support timely and accurate corporate tax filing in India.
• Ongoing compliance monitoring: Stay on top of filing deadlines, advance tax schedules, and jurisdiction-specific requirements to reduce the risk of penalties or missed obligations.
• Local expert support: Connect with qualified accountants and tax advisors for guidance on Indian corporate tax regulations, filings, and compliance requirements.
• Documentation and audit readiness: Organize tax filings, reports, and compliance records in one place to support internal reviews and respond efficiently to tax authority inquiries.
• Cross-border compliance coordination: Manage transfer pricing requirements, foreign tax reporting, and treaty-related compliance alongside domestic tax obligations.

Get expert help with tax compliance in India with Commenda and simplify your corporate tax management.

Common FAQs About Corporate Tax in India

1. What is the current corporate tax rate in India?

Domestic companies are taxed at 15%, 22%, 25%, or 30%, depending on the regime selected. These base rates are further increased by applicable surcharge and a 4% health and education cess.

2. How is corporate income tax calculated in India?

Corporate tax in India is calculated by applying the relevant tax rate to taxable income, then adding surcharge (if applicable) and 4% cess. In some cases, Minimum Alternate Tax (MAT) may apply if normal tax is lower, unless the company is under regimes like 115BAA or 115BAB, which are exempt from MAT.

3. Are there different corporate tax rates for small businesses in India?

India does not have a separate small-business corporate tax category, but companies below a specified turnover threshold may be taxed at 25% instead of 30% under the regular regime.

4. When are corporate tax returns due in India?

• October 31 → Standard deadline
• November 30 → If transfer pricing applies (Form 3CEB)

5. What incentives or deductions are available for companies in India?

Common incentives include:

• 15% tax rate for new manufacturing companies (Section 115BAB)
• Startup tax holiday (Section 80-IAC)
• R&D deductions (Section 35(2AB)

The actual benefit depends on the company’s structure and chosen tax regime.

6. Are foreign companies taxed differently in India?

Yes. Foreign companies are generally taxed at a 35% base rate, along with their own surcharge and cess structure, which differs from that of domestic companies.