Corporate Tax Rates in India 2025-26 — New Regime, Old Regime and Surcharge

India's corporate income tax structure has been significantly reformed since 2019 — with the introduction of a concessional tax regime for domestic companies. Understanding the correct applicable tax rate is essential for tax planning and financial projections. Here is the complete guide to corporate tax rates for FY 2025-26 (AY 2026-27).

Domestic Company — New Concessional Regime (Section 115BAA)

• Tax rate: 22% (plus surcharge 10% + cess 4% = effective rate 25.17%)
• Available to all existing domestic companies
• Conditions: Company must forego specified deductions and exemptions (80IC, 80IE, 10AA, investment allowance, accelerated depreciation, etc.)
• Once opted, cannot switch back to the old regime
• MAT (Minimum Alternate Tax) does NOT apply to companies under 115BAA

New Manufacturing Companies (Section 115BAB)

• Tax rate: 15% (plus surcharge 10% + cess 4% = effective rate 17.01%)
• Available to new domestic manufacturing companies incorporated after October 1, 2019 and commencing production before March 31, 2024 (extended to March 31, 2025)
• Same conditions as 115BAA — no exemptions or deductions
• MAT does NOT apply

Old Tax Regime — For Domestic Companies

• Income up to ₹1 crore: 30% + 4% cess = 31.2%
• Income ₹1 crore to ₹10 crore: 30% + 7% surcharge + 4% cess = 33.38%
• Income above ₹10 crore: 30% + 12% surcharge + 4% cess = 34.94%
• MAT applies at 15% of book profit (if regular tax is lower)

Foreign Companies

• Income taxable in India: 40% (plus applicable surcharge)
• Royalties and fees for technical services (covered by DTAA): Special rates as per the relevant tax treaty
• Branch profit tax applies on after-tax profits (no additional branch profit remittance tax in India)

Most Companies Should Opt for Section 115BAA

For most domestic companies, the 22% rate under Section 115BAA is lower than the effective old regime rate (31.2%-34.94%) — even after losing exemptions. The break-even analysis should be done based on the quantum of exemptions the company was previously claiming.

Conclusion

India's corporate tax framework now offers multiple rate options — with 22% for most domestic companies under 115BAA being the most widely applicable. SPOTON handles corporate tax computation, regime selection, advance tax and ITR-6 filing for companies across Kerala. Contact us for expert corporate tax advisory services.