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.

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What is Corporate Tax in India?
Types of Corporates in India
Types of Income
Calculating Net Income of a Corporate
Corporate Tax Rates for Domestic & Foreign Companies
Surcharge Rate and Additional Cess
Tax Deductions Available
Frequently Asked Questions

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?

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

All

What do you mean by corporate tax in India?

Corporate tax in India is a tax levied on the profits or net income of a corporation. The corporate tax rates are applicable as per the company’s income and profits, in addition to MAT and cess.

Which industry is exempt from corporate tax in India?

Income from the agriculture industry is completely non-taxable as per Section 10(1) of the Income Tax Act. Agricultural income refers to the income earned from production, processing & sale of agricultural crops.

What are business tax rates in India?

The corporate tax rate applicable to domestic companies in India is 30% typically. However, for foreign companies, the corporate tax rate is 35%, effective FY 2024-25 (previously 40%).

What is the due date for filing ITR?

All companies including domestic and foreign must file their ITRs before 31st October 2025 for AY 2025-26, if they require an audit. However, companies which do not require auditing must file their ITRs on or before 31st July of 2025.

What is the new income tax rule for corporate tax in Budget 2024?

For FY 2024-25, Budget 2024 has reduced the India corporate tax rate on foreign companies to 35% from 40%, to boost foreign investment in start-ups, cruises, diamond mining, e-commerce.

Which ITR forms need to be filed by a company?

The companies filing their ITR in India need to submit:

a) ITR 6, except the companies claiming relief under Section 11.
b) ITR 7, for all companies registered under Section 8 of the Companies Act, 2013.

Is corporate tax a type of direct tax?

Yes, corporate tax is a direct tax in India, similar to income tax.

How is corporate tax different from income tax?

Corporate taxation is applicable for business entities, while income tax is applied to individual taxpayers.

Which companies are required to pay corporate taxes?

A corporate is an entity that has a separate and independent legal entity from its shareholders. Therefore, all domestic and foreign corporates operating in India are liable to pay corporate tax in India as per the applicable corporate tax rates.

Do companies need to pay MAT other than corporate tax?

Yes. According to Section 115JB, corporate taxpayers are eligible to pay MAT in a particular year. This is valid when the income tax payable towards the overall income is calculated according to the Income Tax Act and is below 15% of its book profit, in addition to health and education cess and surcharge.

Which companies require tax audit in India?

The threshold limit for companies requiring a tax audit report is ₹10 crore, given the following conditions are fulfilled:

a) Cash receipts for sales, turnover, etc. do not exceed 5% of total turnover.
b) Expenses made in cash do not exceed 5% of the total expenses by the firm.

How to calculate the tax liability for a private limited company in India?

Calculating the tax liability for a private limited company in India involves determining the Net Income, which is calculated as Gross Income minus Expenditures and Depreciation. You can use an income tax calculator to simplify this process and understand the taxable income and corresponding tax liability for the company.