Corporate Tax Rates Under explained: this guide covers what Corporate Tax Rates Under means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
1. Corporate Tax Rate Structure
| Company Type | Tax Rate | Effective Rate (with surcharge and cess) |
|---|---|---|
| Domestic company (default) | 30% | ~34.94% (12% surcharge + 4% cess) |
| Domestic company (Section 200) | 22% | 25.17% (10% surcharge + 4% cess) |
| New manufacturing company (Section 201, post Oct 2019) | 15% | 17.01% (10% surcharge + 4% cess) |
| Foreign company | 40% | ~43.68% |
2. Section 200: 22% Flat Rate
Domestic companies can opt for 22% flat tax rate under Section 200 — but must give up all exemptions and deductions except depreciation under section 33 (other than additional depreciation). Cannot claim: section 144 (SEZ units; section 10AA of the 1961 Act), area-based deductions such as section 80IC of the 1961 Act, or Chapter VIII deductions. Once opted, cannot switch back. Most large companies have opted — 22% (effective 25.17%) is lower than the 30%+ default. No MAT after opting section 200.
3. Section 201: 15% for New Manufacturing
New domestic manufacturing companies incorporated on or after 1 October 2019 and commencing manufacturing by 31 March 2024 can opt for 15% tax. Conditions: must not be formed by splitting/restructuring existing business; cannot use second-hand plant and machinery (beyond 20% of total); company itself must manufacture — no trading/services. Effective rate 17.01%. MAT not applicable.
4. Minimum Alternate Tax (MAT)
MAT at 14% of book profit applies to companies that do NOT opt for Section 200 or 201. MAT ensures companies with zero taxable income (due to deductions) still pay at least 14% of book profit as tax. MAT credit (MAT paid minus normal tax) can be carried forward for 15 years and offset when normal tax exceeds MAT. Book profit = P&L net profit with prescribed adjustments.
5. Dividend Tax: Post-DDT Era
Dividend Distribution Tax (DDT) was abolished from 1 April 2020. Under ITA 2025, companies pay no additional tax on dividend distribution. Dividends are taxable in shareholder hands at slab rates. TDS at 10% is deducted by the company under Section 393 (Table Sl. No. 7, threshold limit nil). The effective double taxation (30% corporate + slab rate dividend) is the key consideration for promoter-directors deciding on salary vs dividend payout.
6. Surcharge on Companies
| Company Type | Surcharge |
|---|---|
| Domestic company (income up to Rs 1 crore) | Nil |
| Domestic company (Rs 1–10 crore) | 7% |
| Domestic company (above Rs 10 crore) | 12% |
| Companies opting section 200/201 | 10% (fixed) |
| Foreign company | 2% (up to Rs 1 crore), 5% (above) |
7. Why TaxClue
Corporate tax planning — regime selection, MAT analysis, dividend vs salary optimisation — requires integrated advisory. TaxClue provides complete corporate tax advisory and return filing. Contact us under ITA 2025.