Corporate Taxes in India 2025

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Corporate Taxes in India 2025 – Complete Guide for Business Owners

Corporate tax is one of the most important financial obligations for businesses in India. Budget 2025 has brought significant updates that aim to simplify compliance and make India a more competitive destination for business.

In this guide, we’ll break down corporate tax rates, surcharges, MAT, key budget changes, and compliance tips for FY 2025-26 so that business owners can plan effectively.

What is Corporate Tax?

Corporate tax is a direct tax levied on the net income or profit of companies. It is calculated after deducting business expenses, depreciation, and eligible exemptions from total revenue.

Corporate tax applies to:

  • Domestic companies (registered in India)

  • Foreign companies earning income from India

Corporate Tax Rates in India (FY 2025-26)

Here are the updated corporate tax rates for domestic companies as per Budget 2025:

Type of Company Tax Rate Conditions
Domestic company (turnover ≤ ₹400 Cr in FY 2023-24) 25% No special conditions
Domestic company opting for Section 115BAA 22% No exemptions/deductions allowed
New manufacturing company under Section 115BAB 15% Incorporated on or after 1 Oct 2019, production starts before 31 Mar 2025
Other domestic companies 30% Regular regime
Foreign companies 40% Taxed on income earned in India

Note: All rates are subject to surcharge and health & education cess (4%).

Surcharge & Cess (2025)

  • Surcharge:

    • 7% if taxable income exceeds ₹1 Cr

    • 12% if taxable income exceeds ₹10 Cr

  • Health & Education Cess: 4% on tax + surcharge

Minimum Alternate Tax (MAT)

MAT ensures companies with large book profits but low taxable income still pay a minimum tax.

  • MAT rate: 15% (plus surcharge & cess)

  • Exemption: Companies opting for Section 115BAA (22%) or 115BAB (15%) are not subject to MAT.

Key Budget 2025 Updates for Businesses

✅ MAT Credit Period Extended: Businesses can now carry forward MAT credit for 15 years (earlier 10 years).

✅ Higher Depreciation on Green Assets: Accelerated depreciation (40%) allowed for EVs, solar equipment, and renewable energy projects.

✅ Simplified TDS/TCS Rules: Higher thresholds reduce compliance burden for businesses dealing with goods purchases, commissions, and rent.

✅ Digital Compliance Push: Mandatory e-filing for more categories of companies and AI-based scrutiny for faster assessments.

Tax Planning Tips for Business Owners (2025-26)

  1. Evaluate Special Regimes:

    • Consider opting for 22% corporate tax regime if you are not claiming deductions (like additional depreciation, R&D).

    • New manufacturers can still enjoy 15% concessional rate if they meet conditions.

  2. Leverage Deductions & Incentives:

    • Invest in R&D, green technology, and skill development to claim eligible deductions if using old regime.

  3. Review Advance Tax Payments:

    • Pay advance tax in 4 instalments to avoid interest under sections 234B/234C.

  4. Reconcile TDS & GST:

    • Match books with Form 26AS and GST returns to avoid mismatches during assessment.

  5. Maintain Proper Documentation:

    • Keep digital records of invoices, board resolutions, transfer pricing documentation, and audit reports.

Compliance Checklist for FY 2025-26

  • ✅ File Income Tax Return (ITR-6) by 31 October 2025 (if tax audit applicable)

  • ✅ Get tax audit report (Form 3CA/3CB & 3CD) filed before 30 September 2025

  • ✅ Deposit advance tax by due dates (15 Jun, 15 Sep, 15 Dec, 15 Mar)

  • ✅ File TDS returns quarterly (Form 24Q/26Q)

  • ✅ Reconcile GSTR-3B & GSTR-1 to claim input tax credit properly

Conclusion

Corporate taxation in India is becoming simpler and more competitive year after year. Budget 2025 has focused on reducing compliance burden, encouraging green investments, and giving companies the flexibility to choose tax regimes that best suit their business model.

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