Corporate Tax Rate in India ranges from 15%, 22%, 25%, or 30%. Find your applicable rate and calculate total tax liability online.
India doesn't have a single corporate tax rate. Most domestic companies pay 25% (turnover under ₹400 crore) or 30%. But under Section 115BAA, any company can opt for a flat 22%. New manufacturers under Section 115BAB pay just 15%. Your actual rate depends entirely on which section you choose.
Here's the part that confuses almost everyone: corporate tax in India isn't a slab system like personal income tax. It's a menu. Your company picks a regime, and that choice locks in your rate, your surcharge, and which deductions you're allowed to claim going forward.
The default, what applies if you do nothing, is the normal regime. Domestic companies with turnover up to ₹400 crore (based on FY 2023-24 turnover, for AY 2026-27) pay 25%. Every other domestic company pays 30%. That's the baseline most older, established businesses still sit under. Often it's because they're carrying forward losses or claiming deductions that the lower-rate regimes don't allow.
Then there are three opt-in regimes, introduced specifically to pull companies toward lower headline rates in exchange for giving up exemptions:
Section 115BA — 25% flat, for certain manufacturing companies set up after March 2016. Rarely used today since 115BAA offers a better deal with fewer restrictions.
Section 115BAA — 22% flat, open to any domestic company regardless of sector, age, or turnover. This is the one most profitable companies have shifted to.
Section 115BAB — 15% flat, but only for new domestic manufacturing companies incorporated on or after 1 October 2019 that started production on or before 31 March 2024. This window has closed for new entrants; it cannot be elected by a company set up today.
Once you pick 115BAA or 115BAB, you can't go back. The Income Tax Act treats the option as irrevocable for that company, for good.
These figures are taken directly from the Income Tax Department's published tax rates page, current as of the Finance Act, 2026.
Company Type / Regime | Base Rate | Surcharge | Cess | Effective Rate | MAT Applicable? |
|---|---|---|---|---|---|
Domestic co., turnover ≤ ₹400 Cr (normal regime) | 25% | 7% (₹1–10 Cr) / 12% (>₹10 Cr) | 4% | ~26.75%–29.12% | Yes, 15% of book profit |
Domestic co., turnover > ₹400 Cr (normal regime) | 30% | 7% / 12% | 4% | ~32.10%–34.94% | Yes, 15% of book profit |
Section 115BA | 25% | 7% / 12% | 4% | ~26.75%–29.12% | Yes |
Section 115BAA | 22% | Flat 10% | 4% | 25.17% | No |
Section 115BAB (new manufacturing, closed to new entrants) | 15% | Flat 10% | 4% | 17.16% | No |
Foreign company | 35% | 2% (₹1–10 Cr) / 5% (>₹10 Cr) | 4% | ~37.10%–38.22% | Yes, 15% of book profit |
A note on surcharge: for normal-regime companies, marginal relief kicks in near the ₹1 crore and ₹10 crore thresholds, so the surcharge doesn't create a sudden jump in tax that exceeds the extra income earned. Under 115BAA and 115BAB, the surcharge is a flat 10% regardless of profit level. There are no slabs and no marginal relief needed, because there's no step to relieve.
Example 1 — Existing private company, ₹2 crore profit, normal regime vs. 115BAA
A Pune-based trading company books ₹2 crore in taxable profit for FY 2025-26. Under the normal 25% regime: tax is ₹50,00,000. Since profit exceeds ₹1 crore, a 7% surcharge applies: ₹3,50,000, bringing it to ₹53,50,000. Add 4% cess (₹2,14,000) for a total tax liability of ₹55,64,000.
If the same company instead opts for Section 115BAA: tax is 22% of ₹2 crore = ₹44,00,000. Surcharge is a flat 10% = ₹4,40,000, bringing it to ₹48,40,000. Add 4% cess (₹1,93,600) for a total of ₹50,33,600. That's a saving of ₹5,30,400, but only if the company is willing to give up deductions like additional depreciation, SEZ benefits under Section 10AA, and several Chapter VI-A deductions.
Example 2 — New manufacturing unit, ₹50 lakh profit, 115BAA vs. 115BAB
A manufacturing company that was incorporated in 2021 and started production in early 2024 qualifies for 115BAB. On ₹50 lakh profit: base tax is 15% = ₹7,50,000. Under 115BAB, the 10% surcharge is flat and applies regardless of profit level, unlike the normal regime where surcharge only kicks in above ₹1 crore. So surcharge here is ₹75,000, bringing tax to ₹8,25,000. Cess at 4% adds ₹33,000, for a total liability of ₹8,58,000.
If this company had instead opted for 115BAA (22%), the same ₹50 lakh profit would attract base tax of ₹11,00,000, surcharge of ₹1,10,000, and cess of ₹48,400, a total of ₹12,58,400. The gap between 115BAB and 115BAA here is ₹4,00,400. That's exactly why the manufacturing incentive existed, and exactly why missing the March 2024 production deadline is so costly for companies that didn't make it in time.
Compute taxable income. Start from net profit per books, then add back disallowed expenses and adjust for depreciation differences between books and tax rules.
Identify your turnover for the relevant prior year. For AY 2026-27, check FY 2023-24 turnover against the ₹400 crore threshold to know if 25% or 30% applies under the normal regime.
Decide your regime. Compare normal regime (with deductions) against 115BAA (22%, no deductions) using your actual numbers, not assumptions. The right call depends on how much you'd otherwise claim in deductions.
Apply base rate, then surcharge, then cess. Surcharge is calculated on the tax amount, not on profit. Cess is calculated on tax plus surcharge combined.
Check MAT exposure if you're in the normal regime or under 115BA. Your final liability is whichever is higher: regular tax or 15% of book profit.
File Form 10-IC (115BAA) or Form 10-ID (115BAB) electronically before your ITR due date if opting for a concessional regime. Miss this and you default to normal-regime tax.
Use our Old vs New Tax Regime Calculator to model the trade-off in minutes rather than building a spreadsheet from scratch.
A few details that trip people up regularly:
115BAA is genuinely open to everyone. Trading companies, service companies, holding companies, all qualify. It has no sector restriction, unlike 115BAB which is manufacturing-only.
115BAB excludes more than people expect. Software development, mining, and film production don't count as "manufacturing" for this section, even though they involve producing something.
Once you opt for 115BAA, MAT credit carried forward from earlier years is lost. You can't use old MAT credit to offset future tax once you've switched regimes.
Turnover threshold uses a rolling prior-year reference, not the current year. A company that crossed ₹400 crore this year still gets 25% if its reference-year turnover was under the limit.
The Section 44AB tax audit threshold is separate from the corporate tax rate threshold. Don't confuse the two. Many companies assume audit applicability and tax rate eligibility move together; they don't. Check audit applicability separately using our Section 44AB Tax Audit Applicability Checker.
Here's something most articles on this topic skip entirely: a company can be eligible for 115BAA on paper but still end up worse off in the year it switches, because of how brought-forward losses and unabsorbed depreciation are treated. When you opt into 115BAA, you must forgo set-off of brought-forward losses attributable to the deductions you're giving up. Additional depreciation claimed in earlier years under the normal regime is a common example. If your company has a large pool of such carried-forward losses, switching to 115BAA in the wrong year can mean losing the ability to use them entirely, even though the flat 22% rate looks attractive on the surface. The right move is almost always to model both regimes across the next 3-4 years, not just the current year, before filing Form 10-IC.
A lot of business owners assume that because 115BAA gives a lower base rate (22% vs. 25% or 30%), it must always result in lower total tax. That's not guaranteed. Consider a company with ₹1 crore profit that has ₹15 lakh in eligible deductions available under the normal regime, say additional depreciation on new machinery. Under the normal 25% regime, taxable income drops to ₹85 lakh after deductions, producing tax of roughly ₹21,25,000 plus surcharge and cess. Under 115BAA, no deductions are allowed, so the full ₹1 crore is taxed at 22%, producing ₹22,00,000 plus its flat 10% surcharge and cess. That's actually higher in this case once the deduction is factored in. The lower rate only wins when the value of forgone deductions is smaller than the rate gap. Always run the comparison on your actual numbers, not the headline percentage.
If your company hasn't formally elected a regime yet, pull your last two years of P&L and identify exactly how much you've been claiming in additional depreciation, Section 10AA, and Chapter VI-A deductions. Run that figure against both regimes using a calculator rather than estimating. Even a ₹2-3 lakh deduction can flip which regime is cheaper. If you're a newer manufacturing entity unsure whether you qualify for 115BAB's now-closed window, check your actual date of commencement of production against the 31 March 2024 cutoff before assuming you're locked out. Some companies misjudge their own eligibility based on incorporation date alone, when it's the production start date that actually matters.
Running an MSME and unsure how your classification affects available incentives alongside your tax regime choice? Use our MSME Classification Calculator to check where you stand before making a regime decision.
Q: What is the corporate tax rate in India for FY 2025-26?
A: It depends on your company. Most domestic companies pay 25% (if turnover is under ₹400 crore) or 30%. Companies that opt for Section 115BAA pay a flat 22%, and new manufacturing companies under Section 115BAB (if eligible) pay 15%. There's no single rate that applies to all companies.
Q: Can any company choose the 22% tax rate under Section 115BAA?
A: Yes. Section 115BAA has no restrictions on sector, age, or turnover. Any domestic company can opt in, but doing so means giving up most deductions and exemptions, including additional depreciation and SEZ benefits.
Q: Is Section 115BAB still available for new companies in 2026?
A: No. Section 115BAB required companies to have started manufacturing on or before 31 March 2024. That deadline has passed and has not been extended, so companies incorporated after this cutoff cannot opt for the 15% rate, even if they meet every other condition.
Q: Do companies under Section 115BAA still have to pay MAT?
A: No. Companies that opt for 115BAA or 115BAB are exempt from Minimum Alternate Tax entirely. MAT only applies to companies under the normal regime or Section 115BA.
Q: What happens if I opt for 115BAA and later want to switch back?
A: You can't. Once a company exercises the option under Section 115BAA, the Income Tax Act treats it as irrevocable for all future assessment years. The same applies to 115BAB.
Q: How is the ₹400 crore turnover threshold for the 25% rate calculated?
A: It's based on turnover from a specific prior year, not the current year. For AY 2026-27, the relevant reference year is FY 2023-24. If your turnover in that year was at or below ₹400 crore, you qualify for 25% under the normal regime for the current assessment year.
Q: What's the difference between Section 115BA and Section 115BAA?
A: Both offer concessional rates, but 115BA is limited to certain manufacturing companies set up after March 2016 and still allows MAT to apply. 115BAA is open to all domestic companies and removes MAT entirely, which is why most eligible companies now prefer 115BAA over 115BA.
Q: Are foreign companies taxed at the same rate as Indian companies?
A: No. Foreign companies operating in India are taxed at a flat 35%, plus surcharge of 2% (income ₹1-10 crore) or 5% (above ₹10 crore), and 4% cess. This is higher than the rates available to domestic companies under any of the concessional regimes.
Income Tax Department — Tax Rates: incometaxindia.gov.in
Central Board of Direct Taxes (CBDT): cbdt.gov.in
Reviewed by Anita Patil (CA) and Viraj Mathpati (Law Student, Symbiosis Law School) | Last Updated: June 2026
This article is for educational purposes only. Consult a qualified CA or legal professional before making tax decisions. See /accuracy-and-limitations.
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