India’s tax system plays a crucial role in shaping business growth, investment decisions, and economic development. For entrepreneurs, investors, and corporate leaders, understanding the corporate tax rate in India is essential for compliance and financial planning. Companies operating in India are subject to various taxes, including income tax, surcharge, cess, and other statutory levies. This comprehensive guide explains the List of all corporatetaxes and its rate in india, helping businesses gain clarity on applicable rates and obligations.
Whether you are a domestic company, foreign corporation, startup, or multinational enterprise, knowing the structure of the corporate tax rate in India ensures better financial strategy and regulatory compliance.
Corporate Tax Rate in India: List of All Corporatetaxes and Its Rate in India
Corporate tax rate in India is varied according to the type of company, turnover and whether the company utilises special concessional schemes that have been brought forward by the government. The corporate taxation is mainly regulated by the Income Tax Act, 1961.
The following is a tabularized detail of the key corporate taxes and the charges
Basic Corporate Income Tax in India
Corporate income tax is levied on the net profits earned by companies registered in India.
1. Domestic Companies
Standard Corporate Tax Rate
- 25% for domestic companies with turnover up to ₹400 crore (as per recent eligibility criteria).
- 30% for domestic companies not covered under concessional provisions.
2. Concessional Corporate Tax Regime (Section 115BAA)
The government introduced a lower corporate tax rate in India for domestic companies that do not claim certain exemptions and deductions.
- 22% flat tax rate
- Plus surcharge at 10%
- Plus 4% health and education cess
Effective tax rate approximately 25.17%.
This option is widely chosen by businesses seeking simplicity and reduced compliance complexity.
3. Tax Rate for New Manufacturing Companies (Section 115BAB)
To promote manufacturing, India offers a reduced tax rate:
- 15% base rate
- 10% surcharge
- 4% cess
Effective rate approximately 17.16%.
This is one of the lowest corporate tax rates globally for manufacturing units.
4. Foreign Companies
Foreign companies operating in India are taxed differently.
- 40% base tax rate
- Surcharge applicable based on income level
- 4% health and education cess
Foreign corporations must also consider Double Taxation Avoidance Agreements (DTAA).
1. Surcharge and Cess
Apart from the base corporate tax rate in India, companies must pay surcharge and cess.
Surcharge Rates
For domestic companies:
- 7% surcharge if income exceeds ₹1 crore but less than ₹10 crore
- 12% surcharge if income exceeds ₹10 crore
For foreign companies:
- 2% surcharge if income exceeds ₹1 crore
- 5% surcharge if income exceeds ₹10 crore
2. Health and Education Cess
- 4% of income tax plus surcharge
This applies across all corporate categories.
Minimum Alternate Tax (MAT)
Minimum Alternate Tax ensures companies that claim significant exemptions still pay a minimum tax.
MAT Rate
- 15% of book profit
- Plus applicable surcharge and cess
However, companies opting for concessional tax regimes under Sections 115BAA and 115BAB are exempt from MAT.
MAT is an important component in the List of all corporatetaxes and its rate in india.
3. Dividend Distribution and Dividend Tax
Earlier, companies paid Dividend Distribution Tax (DDT). However, DDT has been abolished.
Current Rule
Dividends have been made taxable as shareholders in their hands under relevant income tax slabs. Companies are required to pay dividend tax at the current rates.
4. Goods and Services Tax (GST)
Although not directly part of income tax, GST is a major corporate tax obligation.
GST Rates
- 5%
- 12%
- 18%
- 28%
Rates vary depending on goods and services supplied.
GST compliance is crucial for businesses operating in India.
5. Tax Deducted at Source (TDS)
Companies must deduct TDS on various payments.
Common TDS Rates
- 10% on professional fees
- 2% on contractor payments
- 10% on rent (above specified threshold)
- TDS on salaries as per slab rates
TDS forms an important part of the List of all corporatetaxes and its rate in india.
6. Capital Gains Tax for Companies
If companies sell assets or investments, capital gains tax applies.
Short-Term Capital Gains
- Taxed at normal corporate tax rate
Long-Term Capital Gains
- Generally 20% with indexation benefits
- 10% without indexation in specific cases
Capital gains taxation depends on asset type and holding period.
7. Securities Transaction Tax (STT)
Applicable when companies trade in securities through recognized stock exchanges.
STT Rates
- Vary depending on transaction type (delivery-based or intraday)
STT is collected at the time of transaction.
Equalisation Levy
Applies to foreign e-commerce operators providing services in India.
Rate
- 2% on e-commerce supply or services
This tax ensures fair taxation of digital businesses.
9. Transfer Pricing Regulations
Companies involved in international transactions with associated enterprises must comply with transfer pricing rules.
Key Points
- Arm’s length pricing required
- Documentation mandatory
- Penalties for non-compliance
Transfer pricing ensures fair tax assessment on cross-border transactions.
Advance Tax
Companies must pay advance tax if total liability exceeds ₹10,000 in a financial year.
Installment Schedule
- 15% by June 15
- 45% by September 15
- 75% by December 15
- 100% by March 15
Failure to pay advance tax attracts interest penalties.
10. Start-Up Tax Benefits
The government recognizes eligible startups that are eligible to enjoy:
- There are three tax free years under Section 80-IAC.
- Angel tax exemptions (conditional)
These are advantages that promote investment and innovation.
Recent Corporate Tax Reforms
India reduced the corporate tax rate in India in 2019 to boost competitiveness and attract global investors.
Impact of Reforms
- Improved ease of doing business
- Increased foreign investment
- Enhanced manufacturing competitiveness
Lower tax rates have made India attractive compared to many developed economies.
Why Understanding Corporate Tax Matters?
Knowing the corporate tax rate in India helps businesses:
- Plan finances effectively
- Optimize profits
- Ensure compliance
- Avoid penalties
- Make strategic investment decisions
Comprehensive awareness of the List of all corporatetaxes and its rate in india supports long-term sustainability.
Conclusion
The corporate taxation system in India is stable but developing. Corporate tax rate in India differs depending on the type of company, turnover and tax regime adopted by the company. Companies have to deal with various tax requirements which are base income tax and surcharge, TDS, MAT, and capital gains tax.
Knowing the List of all corporatetaxes and its rate in india enables the businesses to stay within the fold and optimally manage the taxation expense. As the nation has recently cut the rates and removed the complexities of the structures, India is still trying to make itself an attractive place to invest and grow businesses.
Effective corporate tax planning, professional advice and on time compliance are essential in maximizing the corporate tax structure in India as well as a sustainable business growth.
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