A company does not use individual income-tax slabs — it pays a flat corporate tax rate. For FY 2025-26, a domestic company pays 30% (or 25% if turnover ≤ ₹400 crore) under the normal regime, a flat 22% under Section 115BAA, or 15% under Section 115BAB if it is a new manufacturer. Foreign companies pay 40%. Surcharge and 4% cess apply on top.
Corporate Tax Rates FY 2025-26 — Full Table
The base rate, surcharge and effective rate (including 4% health & education cess) for every company type and regime. Individuals should instead see the income tax slabs.
| Company Type / Regime | Base Rate | Surcharge | Effective Rate (incl. cess) |
|---|---|---|---|
| Domestic — turnover ≤ ₹400cr (normal) | 25% | 7% / 12% | 27.82% / 29.12% |
| Domestic — turnover > ₹400cr (normal) | 30% | 7% / 12% | 33.38% / 34.94% |
| Domestic — Section 115BAA | 22% | 10% flat | 25.17% |
| New manufacturing — Section 115BAB | 15% | 10% flat | 17.01% |
| Foreign company | 40% | 2% / 5% | 43.68% / 44.00% |
| MAT (book profit) — non-115BAA/BAB | 15% | As applicable | ~15.60%+ |
Surcharge 7% for income ₹1–10cr and 12% above ₹10cr (normal domestic); 10% flat under 115BAA/115BAB; 2% / 5% for foreign companies. Confirm on incometax.gov.in before filing.
Not sure which regime is cheapest for your company?
Get a Rate Review →Normal Regime — 25% and 30% Base Rates
Under the normal provisions of the Income-tax Act, a domestic company is taxed at:
- 25% — if total turnover or gross receipts in the previous financial year did not exceed ₹400 crore.
- 30% — for all other domestic companies (turnover above ₹400 crore).
Companies in the normal regime remain subject to MAT at 15% of book profit and can still claim deductions under Chapter VI-A. Surcharge is 7% (income ₹1–10cr) or 12% (above ₹10cr), plus 4% cess.
Section 115BAA vs 115BAB — Concessional Regimes
The bigger decision for most companies is whether to opt into a concessional flat rate. Both give up deductions, carry a flat 10% surcharge and are exempt from MAT.
Section 115BAA — any domestic company
- Flat 22% (effective 25.17%)
- No turnover limit — any company can opt in
- No MAT under Section 115JB
- Must give up 80-IC, 80-IE, 10AA, additional depreciation etc.
- Opt in via Form 10-IC — cannot be withdrawn
Section 115BAB — new manufacturers
- Flat 15% (effective 17.01%) — India's lowest
- Incorporated on/after 1 Oct 2019
- Must begin manufacturing by 31 March 2027
- Not formed by splitting / reconstruction
- No MAT; opt in via Form 10-ID
Once a company opts into 115BAA or 115BAB (Form 10-IC / 10-ID), the option cannot be withdrawn in later years, and any unabsorbed MAT credit lapses. Model the numbers across a few years — a company with large 80-IC / SEZ deductions may still be better off in the normal regime.
Choosing between 115BAA, 115BAB and the normal regime?
Talk to a Corporate Tax Expert →MAT — Section 115JB
MAT ensures a company with high book profits but low taxable income (due to deductions) still pays a minimum tax. It is 15% of book profit (plus surcharge and cess) and applies to companies in the normal regime only — companies under 115BAA or 115BAB are fully exempt from MAT.
- MAT is payable when 15% of book profit exceeds the normal tax liability.
- Excess MAT becomes MAT credit under Section 115JAA, carried forward up to 15 years.
- MAT credit cannot be carried forward once a company shifts to 115BAA.
Same Profit, Three Regimes — ₹10 crore
30% Normal regime
22% Section 115BAA
On the same ₹10 crore income, opting into 115BAA saves roughly ₹82 lakh versus the normal 30% regime — provided the company was not relying on large deductions it must now forgo.
Surcharge & Cess on Corporate Tax
| Income Range | Normal Domestic | 115BAA / 115BAB | Foreign Company |
|---|---|---|---|
| Up to ₹1 crore | Nil | 10% | Nil |
| ₹1 crore to ₹10 crore | 7% | 10% | 2% |
| Above ₹10 crore | 12% | 10% | 5% |
Health & education cess of 4% applies on (tax + surcharge) in every case. Surcharge under 115BAA/BAB is a flat 10% at all income levels.
Foreign Companies & Dividend Tax
A foreign company is taxed at a flat 40% base rate on India-sourced income, with 2% / 5% surcharge and 4% cess. Royalty and fees for technical services may be taxed at 10% or the applicable DTAA rate, whichever is beneficial.
Since DDT was abolished in FY 2020-21, dividends are taxed in the shareholder's hands at their slab rate. Companies deduct TDS at 10% under Section 194 above ₹5,000/year, and a company can claim a Section 80M deduction for dividends it passes on to its own shareholders.
The headline rate is not the whole story. A company with heavy deductions may pay less under the normal 25%/30% regime than under 115BAA, while a new manufacturer that qualifies for 115BAB locks in the lowest effective rate in Asia. Run the comparison before filing Form 10-IC / 10-ID.
Frequently Asked Questions
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