{"id":7118,"date":"2025-06-26T12:25:14","date_gmt":"2025-06-26T12:25:14","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7118"},"modified":"2025-06-26T12:25:18","modified_gmt":"2025-06-26T12:25:18","slug":"corporate-tax","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/corporate-tax\/","title":{"rendered":"Corporate Tax"},"content":{"rendered":"<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/corporate-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Corporate tax<\/a> is the <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>tax<\/a> that companies pay on their profits. If you&rsquo;re running a business in India, understanding corporate tax is essential. Let&rsquo;s break it down in simple terms.<\/p>\n\n\n\n<h2 id=\"what-is-corporate-tax\" class=\"wp-block-heading\">What is Corporate Tax?<\/h2>\n\n\n\n<p>Corporate tax is a tax imposed on the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/net-income\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">net income<\/a> or profit of companies. In India, both domestic and foreign companies are liable to pay corporate tax on their earnings.<\/p>\n\n\n\n<h2 id=\"corporate-tax-rates-in-india-for-fy-2025-26-ay-2026-27\" class=\"wp-block-heading\">Corporate Tax Rates in India for FY 2025-26 (AY 2026-27)<\/h2>\n\n\n\n<h3 id=\"1-domestic-companies\" class=\"wp-block-heading\">1. <strong>Domestic Companies<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Companies with Turnover up to &#x20B9;400 crore<\/strong>:\n<ul class=\"wp-block-list\">\n<li><strong>Tax Rate<\/strong>: 25%<\/li>\n\n\n\n<li><strong>Surcharge<\/strong>:\n<ul class=\"wp-block-list\">\n<li>7% if income exceeds &#x20B9;1 crore but does not exceed &#x20B9;10 crore<\/li>\n\n\n\n<li>12% if income exceeds &#x20B9;10 crore<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Health and <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/education-cess\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Education Cess<\/a><\/strong>: 4% on tax plus surcharge<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Companies with Turnover above &#x20B9;400 crore<\/strong>:\n<ul class=\"wp-block-list\">\n<li><strong>Tax Rate<\/strong>: 30%<\/li>\n\n\n\n<li><strong>Surcharge<\/strong>:\n<ul class=\"wp-block-list\">\n<li>7% if income exceeds &#x20B9;1 crore but does not exceed &#x20B9;10 crore<\/li>\n\n\n\n<li>12% if income exceeds &#x20B9;10 crore<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Health and Education Cess<\/strong>: 4% on tax plus surcharge<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 id=\"2-optional-tax-regimes-for-domestic-companies\" class=\"wp-block-heading\">2. <strong>Optional Tax Regimes for Domestic Companies<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Section 115BAA<\/strong>:\n<ul class=\"wp-block-list\">\n<li><strong>Tax Rate<\/strong>: 22%<\/li>\n\n\n\n<li><strong>Surcharge<\/strong>: 10%<\/li>\n\n\n\n<li><strong>Health and Education Cess<\/strong>: 4%<\/li>\n\n\n\n<li><em>Note<\/em>: Companies opting for this regime cannot avail certain exemptions and deductions.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Section 115BAB<\/strong> (for new manufacturing companies):\n<ul class=\"wp-block-list\">\n<li><strong>Tax Rate<\/strong>: 15%<\/li>\n\n\n\n<li><strong>Surcharge<\/strong>: 10%<\/li>\n\n\n\n<li><strong>Health and Education Cess<\/strong>: 4%<\/li>\n\n\n\n<li><em>Note<\/em>: Applicable to companies incorporated on or after October 1, 2019, and commencing production before March 31, 2023.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 id=\"3-foreign-companies\" class=\"wp-block-heading\">3. <strong>Foreign Companies<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Tax Rate<\/strong>: 40%<\/li>\n\n\n\n<li><strong>Surcharge<\/strong>:\n<ul class=\"wp-block-list\">\n<li>2% if income exceeds &#x20B9;1 crore but does not exceed &#x20B9;10 crore<\/li>\n\n\n\n<li>5% if income exceeds &#x20B9;10 crore<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Health and Education Cess<\/strong>: 4% on tax plus surcharge<\/li>\n<\/ul>\n\n\n\n<h2 id=\"summary-table\" class=\"wp-block-heading\">Summary Table<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th>Company Type<\/th><th>Tax Rate<\/th><th>Surcharge<\/th><th>Health &amp; Education Cess<\/th><\/tr><\/thead><tbody><tr><td>Domestic (Turnover &#x2264; &#x20B9;400 crore)<\/td><td>25%<\/td><td>7% \/ 12%<\/td><td>4%<\/td><\/tr><tr><td>Domestic (Turnover &gt; &#8377;400 crore)<\/td><td>30%<\/td><td>7% \/ 12%<\/td><td>4%<\/td><\/tr><tr><td>Domestic (Section 115BAA)<\/td><td>22%<\/td><td>10%<\/td><td>4%<\/td><\/tr><tr><td>Domestic (Section 115BAB)<\/td><td>15%<\/td><td>10%<\/td><td>4%<\/td><\/tr><tr><td>Foreign Companies<\/td><td>40%<\/td><td>2% \/ 5%<\/td><td>4%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\">\n\n\n\n<h2 id=\"minimum-alternate-tax-mat\" class=\"wp-block-heading\">Minimum Alternate Tax (MAT)<\/h2>\n\n\n\n<p>If a company&#x2019;s tax liability is less than 15% of its book profits, it must pay MAT at 15% of the book profits. However, companies opting for taxation under Sections 115BAA or 115BAB are exempt from MAT.<\/p>\n\n\n\n<h2 id=\"key-points-to-remember\" class=\"wp-block-heading\">Key Points to Remember<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Corporate tax is levied on a company&#x2019;s net income.<\/li>\n\n\n\n<li>Tax rates vary based on company type and turnover.<\/li>\n\n\n\n<li>Optional tax regimes offer lower rates but come with conditions.<\/li>\n\n\n\n<li>Foreign companies are taxed at a higher rate compared to domestic companies.<\/li>\n\n\n\n<li>Always consider surcharges and cess when calculating total tax liability.<\/li>\n<\/ul>\n\n\n\n<p>Understanding corporate tax rates helps in effective financial planning and compliance. Always consult with a tax professional to choose the most beneficial tax regime for your company.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Corporate tax is the tax that companies pay on their profits. If you&#x2019;re running a business in India, understanding corporate tax is essential. Let&#x2019;s break it down in simple terms. What is Corporate Tax? Corporate tax is a tax imposed on the net income or profit of companies. In India, both domestic and foreign companies [&#x2026;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7118","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7118\/revisions"}],"predecessor-version":[{"id":7119,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7118\/revisions\/7119"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}