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Corporate tax is a form of direct tax imposed by the government on the net income or profit of corporations and other business entities. It is an essential part of a country’s revenue generation and varies based on the size, type, and nature of the business. In India, corporate tax is governed by the Income Tax Act, 1961.
Base Rate: 25% for companies with a turnover of up to ₹400 crores.
Others: 30%.
Special Rates: Companies opting for section 115BAA or section 115BAB can benefit from lower rates of 22% and 15%, respectively, subject to conditions.
Income from Indian Operations: 40%.
Other Income: Rates vary depending on the nature of income and applicable treaties.
Helps in economic growth by funding public infrastructure and services.
Attracts foreign investment via competitive tax rates and incentives.
Encourages compliance through incentives like deductions for investments in specific sectors.
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FAQs on Corporate Tax in India
Corporate tax is a direct tax imposed on the net income or profits of companies. It is mandatory for both domestic and foreign companies operating in India.
Domestic Companies: 25% for companies with a turnover of up to ₹400 crores, and 30% for others.
Foreign Companies: 40% on income generated in India.
Special rates are available under sections 115BAA and 115BAB for specific companies.
MAT is a tax applied to book profits of companies under section 115JB of the Income Tax Act. It ensures that companies with significant book profits pay at least a minimum tax.
All companies incorporated or operating in India, including private, public, and foreign entities earning income in India, must pay corporate tax.
Yes, startups registered under the Startup India scheme and fulfilling specific criteria can benefit from reduced tax rates or exemptions under sections 80-IAC and 115BAB.
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