hamburger
×
Digit General Insurance Logo
phone icon
Powered By Digit
  1. Digit Insurance
  2. Income Tax
  3. Corporate Tax in India
close
mobile-img

Check Credit Score for FREE

Instant in 2 Mins. No Impact on Credit Score

desktop-img

What is the Corporate Gains Tax Rate for FY 2024-25?

all about corporate tax rates in india for financial year 2024- 2025

In a direct taxation system such as in India, the income made by an individual or a business entity is taxed as per the prescribed rate. Depending on the categories of taxpayers, this direct tax can be subdivided into personal and corporate tax.

This article summarises the essential aspects of corporate tax in India. Hence, interested readers must keep reading to know more about it.

Table of Contents

arrow-icon

What is Corporate Tax in India?

Corporate taxation in India is applicable for companies of all sizes and industries. So, corporate tax meaning is the tax levied by the government on a company’s net income or profits.

A company’s taxable income is calculated by deducting the cost of goods sold (COGS), general and administrative (G&A) expenses, selling and marketing, depreciation, research & development, etc., from the company’s revenue.

A corporate tax is a direct tax chargeable on the income earned by foreign and domestic companies in India. While corporate tax on a domestic company is levied on its universal income, corporate taxation for a foreign company is only applicable on the income earned within India.

What are the Different Types of Corporates in India?

A corporate implies a juristic person who is a legal body independent from its shareholders. An income generated by a corporate is assessed and evaluated separately from the dividends it provides to its stakeholders. It is not considered in calculating the tax for a corporate but is assessed as a shareholder's income.

A corporate is further divided into 2 categories which are summarized in the following table:

Corporate Type Meaning
Foreign Corporate  A foreign corporation denotes a company that is not Indian in its origin and registered under the Companies Act of India, where some proportion of management and control rests outside India.
Domestic Corporate  A corporate recognised under the Companies Act of India is referred to as a domestic company. It also covers foreign companies where the management and control are entirely based in India. 

What are the Types of Income a Company Earns?

Knowing about the components that constitute the total income of a company is essential to compute corporate tax on it. Here are the following types of income that makes up the income of a company:

  • Profits
  • Capital gains
  • Income arising from renting a property
  • Additional sources of income, such as interest and foreign dividends

Things to Consider for Calculating Net Income of a Corporate

Once an individual understands what comprises an income of a corporation, it's easier to calculate its net income. A corporation usually calculates corporate tax on net revenue. The latter is the remaining amount after deducting the required expenses from income. The components of income have been discussed above. Now, the expenditures of a corporate include:

  • Depreciation
  • The cost of selling commodities
  • Expenditures associated with administrative purposes, etc.

Thus, after assessing both, use the following formula to calculate the net income of a corporate-

Net Income = Gross Income – (Expenditures + Depreciation)

What are the Corporate Tax Rates in India?

Take a look at the following table that highlights the corporate tax rate in India:

Corporate Tax Rate for Domestic Companies for FY 2024-25

Categories of Company Corporate Tax Rate
Where its total turnover or gross receipt during FY 2021-22 does not exceed ₹400 crore   NA 
Where its total turnover or gross receipt during FY 2022-23 does not exceed ₹400 crore 25%  
Any other domestic company 30%  
Company opting for Section 115BA 25% 
Company opting for Section 115BAA 22% 
Company opting for Section 115BAB  15%

Corporate Tax Rate for Foreign Companies for FY 2024-25

Income Range Corporate Tax Rates
Royalty earned from an Indian resident or Government after 31st March 1961 but before 1st April 1976/ Fees received from rendering technical services after 29th February 1964 but before 1st April 1976, given the approval from the Central Government  50% 
Any other income  35% 

What is the Surcharge Rate and Additional Cess on Corporate Tax?

Following are the surcharge rates and additional cess for FY 2024-25, which are to be added to the rates mentioned above:

For Domestic Companies

Particulars Surcharge Rate
Aggregate turnover is more than ₹1 crore but within ₹10 crores  7% 
Aggregate income is more than ₹10 crores 12% 
If opted under Section Section 115BAB and Section 115BAA 10% (exempt from paying MAT) 
Health and education cess  4% 
MAT (Minimum Alternate Tax) on profits, applicable when the tax is calculated according to Section 115JB  15% 

For Foreign Companies

Particulars Surcharge Rates
Aggregate turnover is more than ₹1 crore but within ₹10 crores  2% 
Aggregate income is more than ₹10 crores  5% 
Health and education cess  4% 

What Tax Deductions are Available on Income Tax of a Corporate?

tax rebates on income tax

Here is the list of tax rebates available on income tax on business income:

  • A domestic company can eliminate the dividends received from another domestic company while calculating its income.
  • Deductions are available for new undertakings and exports.
  • A company can claim deductions on newly established infrastructure and power sources.
  • Certain provisions are available for venture capital enterprises and funds.
  • A company can take forward a business loss for up to 8 years.
  • In specific cases, deductions are applicable on dividends, interest and capital gains.

 

Knowing about the details of corporate tax in India will assist a company in planning their finances in advance and managing their tax liabilities accordingly. However, one can get help from professionals to avoid any inconvenience later.

FAQs on Corporate Gains Tax