Corporate Tax Rate India 2025-26 — Company Income Tax Rates & MAT

Q: What is the corporate tax rate in India for FY 2025-26?

For FY 2025-26, domestic companies have two options. Under the new concessional regime (Section 115BAA): flat 22% tax rate — effective rate 25.17% after 10% surcharge and 4% cess. Under the old/existing regime: 30% basic rate (or 25% if turnover does not exceed ₹400 crore in the previous year), plus applicable surcharge and cess. New manufacturing companies incorporated after 1 October 2019 and commencing production before 31 March 2024 can opt for 15% under Section 115BAB — effective 17.01%.

Q: What is Section 115BAA and who can opt for it?

Section 115BAA introduced by the Taxation Laws Ordinance 2019 allows any domestic company to pay income tax at a concessional rate of 22% (plus surcharge 10% and cess 4% = effective 25.17%) without availing most deductions and exemptions. To opt in: the company must not claim deductions under Chapter VI-A (80IC, 80IE, etc.), Section 10AA, or deductions for accelerated depreciation except section 32 normal depreciation. Once opted, the company cannot switch back to the old regime. MAT (Minimum Alternate Tax) does not apply to companies under Section 115BAA.

Q: How is company income tax calculated in India?

Company income tax = (Taxable income × Basic tax rate) + Surcharge on tax + Health & Education cess (4% on tax+surcharge). Example for a domestic company under Section 115BAA with taxable income ₹10 crore: Tax at 22% = ₹2.20Cr. Surcharge at 10% = ₹22L. Subtotal ₹2.42Cr. Cess at 4% = ₹9.68L. Total tax = ₹2.5168Cr (effective rate 25.17%). For foreign companies: 40% basic rate + surcharge 2%/5% depending on income bracket + 4% cess.

Q: What is MAT (Minimum Alternate Tax) in income tax?

MAT (Minimum Alternate Tax) under Section 115JB ensures that zero-tax companies with large book profits still pay some tax. MAT is calculated at 15% of book profit (as per Company Act P&L). If a company's regular income tax liability is less than 15% of book profit, it pays MAT instead. MAT Credit: excess MAT paid over regular tax is carried forward as MAT Credit and can be set off in future years when regular tax exceeds MAT. Companies opting for Section 115BAA (22%) or Section 115BAB (15%) are EXEMPT from MAT.

Q: Can a company claim 80C deduction under income tax?

No. Section 80C deductions (PPF, LIC, ELSS, etc.) are available only to individuals and HUFs — not to companies, firms, or LLPs. Companies can claim business deductions under Sections 30-44 (rent, depreciation, interest, salaries, etc.) to arrive at taxable income. Under the new regime (Section 115BAA), even certain Chapter VI-A deductions that were available to companies (like 80IC for special economic zones) are not permitted.

Updated: 3 June 2026 | FY 2025-26 (AY 2026-27) | Section 115BAA, 115BAB | Income-tax Act, 2025

Corporate tax rates FY 2025-26: Domestic companies — new concessional regime (Section 115BAA): 22% + 10% surcharge + 4% cess = effective 25.17% (no exemptions/deductions). Old/existing regime: 30% (or 25% if turnover ≤ ₹400 Cr) + surcharge + cess. New manufacturing companies (incorporated after Oct 2019, Section 115BAB): 15% = effective 17.01%. Foreign companies: 40% + surcharge + cess. MAT (Minimum Alternate Tax): 15% of book profit — not applicable under Section 115BAA.

25.17%

Effective corporate tax rate under new regime (Section 115BAA) — 22% + surcharge + cess.
MAT does not apply. No need to claim deductions. Simple, flat rate for most domestic companies.

Corporate Tax Rates — All Categories (FY 2025-26)

Company Type	Basic Tax Rate	Surcharge	Cess	Effective Rate
Domestic — new regime (Sec 115BAA)	22%	10% flat	4%	25.17%
Domestic — old regime (turnover > ₹400Cr)	30%	7% / 12%	4%	~34.94%
Domestic — old regime (turnover ≤ ₹400Cr)	25%	7% / 12%	4%	~29.12%
New mfg. company (Sec 115BAB)	15%	10% flat	4%	17.01%
Foreign company	40%	2% / 5%	4%	~43.68%
Cooperative society (new regime, Sec 115BAD)	22%	10% flat	4%	25.17%

Surcharge Rates for Companies (FY 2025-26)

Company Type	Income Range	Surcharge Rate
Domestic company (old regime)	₹1 Cr – ₹10 Cr	7%
Domestic company (old regime)	Above ₹10 Cr	12%
Domestic company (new regime — Sec 115BAA)	Any income	10% (flat)
Foreign company	₹1 Cr – ₹10 Cr	2%
Foreign company	Above ₹10 Cr	5%

MAT — Minimum Alternate Tax

MAT under Section 115JB ensures companies with significant book profits (as per Companies Act P&L) pay a minimum tax even when their regular income tax liability is low due to deductions. MAT rate: 15% of book profit. If regular tax < MAT, the company pays MAT. The excess (MAT over regular tax) becomes MAT Credit — available for set-off for up to 15 years when regular tax exceeds MAT.

MAT not applicable to: Companies opting Section 115BAA (22% new regime) or Section 115BAB (15% new mfg.). These companies are specifically excluded from MAT provisions.

Frequently Asked Questions

What is the corporate tax rate in India for FY 2025-26?

For FY 2025-26, domestic companies have two options. Under the new concessional regime (Section 115BAA): flat 22% tax rate — effective rate 25.17% after 10% surcharge and 4% cess. Under the old/existing regime: 30% basic rate (or 25% if turnover does not exceed ₹400 crore in the previous year), plus applicable surcharge and cess. New manufacturing companies incorporated after 1 October 2019 and commencing production before 31 March 2024 can opt for 15% under Section 115BAB — effective 17.01%.

What is Section 115BAA and who can opt for it?

Section 115BAA introduced by the Taxation Laws Ordinance 2019 allows any domestic company to pay income tax at a concessional rate of 22% (plus surcharge 10% and cess 4% = effective 25.17%) without availing most deductions and exemptions. To opt in: the company must not claim deductions under Chapter VI-A (80IC, 80IE, etc.), Section 10AA, or deductions for accelerated depreciation except section 32 normal depreciation. Once opted, the company cannot switch back to the old regime. MAT (Minimum Alternate Tax) does not apply to companies under Section 115BAA.

How is company income tax calculated in India?

Company income tax = (Taxable income × Basic tax rate) + Surcharge on tax + Health & Education cess (4% on tax+surcharge). Example for a domestic company under Section 115BAA with taxable income ₹10 crore: Tax at 22% = ₹2.20Cr. Surcharge at 10% = ₹22L. Subtotal ₹2.42Cr. Cess at 4% = ₹9.68L. Total tax = ₹2.5168Cr (effective rate 25.17%). For foreign companies: 40% basic rate + surcharge 2%/5% depending on income bracket + 4% cess.

What is MAT (Minimum Alternate Tax) in income tax?

MAT (Minimum Alternate Tax) under Section 115JB ensures that zero-tax companies with large book profits still pay some tax. MAT is calculated at 15% of book profit (as per Company Act P&L). If a company's regular income tax liability is less than 15% of book profit, it pays MAT instead. MAT Credit: excess MAT paid over regular tax is carried forward as MAT Credit and can be set off in future years when regular tax exceeds MAT. Companies opting for Section 115BAA (22%) or Section 115BAB (15%) are EXEMPT from MAT.

Can a company claim 80C deduction under income tax?

No. Section 80C deductions (PPF, LIC, ELSS, etc.) are available only to individuals and HUFs — not to companies, firms, or LLPs. Companies can claim business deductions under Sections 30-44 (rent, depreciation, interest, salaries, etc.) to arrive at taxable income. Under the new regime (Section 115BAA), even certain Chapter VI-A deductions that were available to companies (like 80IC for special economic zones) are not permitted.

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