Corporate Tax in India: Meaning, Rates, Filing Rules and Due Dates

Corporate Tax Meaning and Scope

Corporate tax is the income tax paid by a company on its taxable income. India does not have a separate corporate-tax code. Corporate income for FY 2025-26 and AY 2026-27 continues to be governed by the Income-tax Act, 1961.

Accounting Profit and Taxable Income

A company does not calculate its tax by simply applying the tax rate to the profit shown in its accounts. The calculation normally begins with accounting profit, which then gets adjusted for:

• Expenses that are not deductible for tax purposes
• Tax depreciation instead of book depreciation
• Exempt income
• Deductions and incentives
• Carried-forward losses
• Income taxed at a special rate

The result is the company’s taxable income. A clear reconciliation between profit before tax and taxable income is one of the most important documents in a corporate tax file.

Resident and Foreign Companies

A resident company is generally taxed in India on its worldwide income. A non-resident company is generally taxed on income received in India or income that accrues, arises or is deemed to accrue or arise in India.

An Indian company is resident in India. A foreign company can also be treated as resident if its place of effective management, meaning where its key management and commercial decisions are made, is in India. A tax treaty may affect how its income is taxed.

Corporate Tax Rates for FY 2025-26

For AY 2026-27, domestic companies are taxed at 22%, 25% or 30%, depending on the regime and applicable turnover test. The final liability may also include surcharge and a 4% Health and Education Cess, as set out in the official tax rates for domestic companies.

Domestic Company Rates

Under the normal provisions, surcharge is:

• Nil where total income does not exceed ₹1 crore
• 7% where total income exceeds ₹1 crore but does not exceed ₹10 crore
• 12% where total income exceeds ₹10 crore

Marginal relief may reduce the tax increase when income is only slightly above the ₹1 crore or ₹10 crore surcharge threshold.

Under section 115BAB, the 15% rate is available only to eligible domestic manufacturing companies that began production by 31 March 2024. The Finance Act, 2022 moved the qualifying deadline from 31 March 2023 to 31 March 2024. Meeting this deadline alone is not enough; the company must also satisfy the regime’s remaining conditions.

Foreign Company Rates

For AY 2026-27, a foreign company generally pays tax at 35% on income not covered by a separate rate, as per the foreign-company tax guidance, along with 2% and 5% surcharges.

A 50% rate can apply to specified royalties and fees for technical services received under certain older, approved agreements. A specific provision or an applicable tax treaty may also provide a different rate.

Choosing Between the Normal and Concessional Regimes

A company should prepare a complete calculation under both regimes before choosing section 115BAA. From tax year 2026-27, section 200 of the Income-tax Act, 2025 continues the 22% domestic-company regime.

The option must be exercised by the applicable return due date. Once exercised, it generally cannot be withdrawn

A company with large deductions or eligible carried-forward losses may pay less under the normal provisions even though its base rate is higher. A company with few deductions may benefit from section 115BAA.

The comparison should include special-rate income, foreign tax credit, TDS credit, MAT credit and the value of deductions that would be lost. There is no single break-even percentage that works for every company.

Corporate Tax Calculation: ₹5 Crore Example

Assume a domestic company has ₹5 crore of taxable income. All its income is taxed at the ordinary company rate. 

Note: This simplified example ignores marginal relief, special-rate income, brought-forward losses, tax credits and deductions that may differ between regimes.

Minimum Alternate Tax (MAT)

Minimum Alternate Tax, or MAT, is a separate calculation based on adjusted book profit. Where MAT applies, the company pays the higher of its normal tax liability and its MAT liability. 

Surcharge and cess are additional. A qualifying International Financial Services Centre unit continues to have a 9% MAT rate.

MAT does not apply to domestic companies that have validly opted for section 115BAA or section 115BAB.

Unused MAT credit earned up to 31 March 2026 can still be carried forward for up to 15 years from the year it arose. A domestic company moving to the concessional regime under section 200 or section 201 may use eligible accumulated MAT credit, but the amount used in one year cannot exceed 25% of that year’s tax liability. No new MAT credit is created from tax year 2026-27.

Corporate Tax Return and Filing Requirements

Every company must file an income-tax return, including those that report a loss or have no taxable income.

ITR Form and Filing Mode

ITR-6 applies to companies other than those claiming exemption under section 11. A company filing under the relevant charitable or institutional provisions normally uses ITR-7.

For AY 2026-27, companies must file their income-tax returns electronically using a valid Digital Signature Certificate. ITR-6 and any applicable option forms must be submitted by their respective deadlines.

You do not attach financial statements or supporting documents to ITR-6. However, separately prescribed reports and forms must still be filed by their due dates.

Tax Audit Requirement

Under section 44AB, a business is generally subject to tax audit when its turnover or gross receipts exceed ₹1 crore. The threshold increases to ₹10 crore where:

• Cash receipts do not exceed 5% of total receipts
• Cash payments do not exceed 5% of total payments

A company whose accounts are already audited under another law normally uses Form 3CA with Form 3CD when section 44AB applies. A statutory audit under the Companies Act and a tax audit under the Income-tax Act serve different purposes.

Documents and Records to Keep Ready

Filing Process

1. Finalise the books and complete the statutory audit.
2. Reconcile the ledgers with Form 26AS, the Annual Information Statement (AIS), GST returns and bank records.
3. Calculate tax under the applicable regime and MAT, where relevant.
4. Complete the tax audit and transfer-pricing report, if required, and pay any remaining self-assessment tax.
5. Prepare and file ITR-6 using the company’s registered Digital Signature Certificate (DSC), then retain the acknowledgement, filed JSON and final tax calculation.

Due Dates for AY 2026-27

The 21 October and 21 November dates are specific extensions for AY 2026-27 as per CBDT Circular No. 07/2026. They do not permanently change the ordinary statutory deadlines.

Advance Tax Payment Schedule

Advance tax generally applies where the estimated tax liability for the year is ₹10,000 or more. Companies pay advance tax in four cumulative instalments.

The company should revise its estimate at every instalment. Changes in profit, capital gains, disallowances or tax credits can affect the remaining amount.

Late Filing Consequences

Income-tax Act, 2025: What Changes from 1 April 2026?

The Income-tax Act, 2025 applies from 1 April 2026 and uses the term “tax year” instead of the earlier previous-year and assessment-year framework.

Income earned during FY 2025-26 is still reported for AY 2026-27 under the Income-tax Act, 1961. Income earned from 1 April 2026 falls under tax year 2026-27 and the Income-tax Act, 2025.

Under section 263 of the Income-tax Act, 2025, the ordinary return deadline for a company is 31 October of the following financial year. The deadline is 30 November where the specified transfer-pricing report is required. Any extension announced for a particular year should be checked separately.

How BUSY Supports Tax Preparation

BUSY can generate the profit and loss account, balance sheet, trial balance, cash flow, fund flow, ageing, stock and GST reports used to prepare tax working papers. The accounting software can also help finance teams trace ledger balances and reconcile reported figures.

The software does not select a tax regime or replace the final tax calculation, statutory audit or professional review. Use the reports to reconcile the books, then have the regime selection, MAT position and ITR-6 reviewed by a qualified Chartered Accountant. Businesses that want to review the reporting workflow can start a BUSY free trial.

Conclusion

Corporate tax liability depends on taxable income, the applicable tax regime, available deductions and losses, income taxed at separate rates and MAT where relevant. Companies should reconcile their books, complete the required tax workings and audits, and file the applicable returns and reports within their respective deadlines.