Corporate Tax Calculator
Calculate taxes for companies and businesses with different tax slabs and deductions
Corporate tax in India is levied on the income of domestic and foreign companies. The tax rates vary based on:
- Type of company (domestic or foreign)
- Total turnover or gross receipts
- Whether the company has opted for the concessional tax regime under Section 115BAA or 115BAB
- Applicable surcharge and education cess
Corporate Tax Calculation Results
Total Tax Liability
Net tax payable after adjusting tax credits
| Total Income | ₹ 0 |
|---|---|
| Taxable Income | ₹ 0 |
| Tax Rate | 0% |
| Base Tax | ₹ 0 |
| Surcharge | ₹ 0 |
| Health & Education Cess | ₹ 0 |
| Gross Tax Liability | ₹ 0 |
| Tax Credits | ₹ 0 |
| Net Tax Liability | ₹ 0 |
Tax Breakdown
Detailed Computation
| Particulars | Amount (₹) |
|---|---|
| Business Income | 0 |
| Other Income | 0 |
| Gross Total Income | 0 |
| Less: Depreciation | 0 |
| Less: Scientific Research Deduction | 0 |
| Less: Eligible Donations | 0 |
| Less: Other Deductions | 0 |
| Net Taxable Income | 0 |
| Tax on Net Taxable Income | 0 |
| Minimum Alternate Tax (MAT) | 0 |
| Add: Surcharge | 0 |
| Add: Health & Education Cess (4%) | 0 |
| Gross Tax Liability | 0 |
| Less: TDS/TCS/Advance Tax | 0 |
| Less: MAT Credit Utilized | 0 |
| Net Tax Payable/(Refundable) | 0 |
Important Notes:
- For domestic companies with turnover up to ₹400 crores (in FY 2021-22), the tax rate is 25%.
- Companies opting for Section 115BAA are taxed at a flat 22% (effective rate 25.17% with surcharge and cess).
- New manufacturing companies under Section 115BAB are taxed at 15% (effective rate 17.16% with surcharge and cess).
- Foreign companies are taxed at a flat rate of 40% plus applicable surcharge and cess.
- The above calculation is for estimation purposes only. Please consult a tax professional for specific advice.
Corporate Tax Guide & Tutorial
Understanding Corporate Taxation in India
Corporate tax is a direct tax imposed on the income or capital of corporations and companies. In India, this tax is governed by the Income Tax Act, 1961 and is a significant source of revenue for the government. Companies registered under the Companies Act are required to pay corporate tax on their global income if they are resident entities or on income sourced in India if they are foreign entities.
Domestic Companies
Companies incorporated in India or those that have their effective management in India. They are taxed on their global income and have multiple tax regime options.
Foreign Companies
Companies incorporated outside India, with management and control outside India. They are taxed only on income earned or accrued in India at higher rates.
Corporate Tax Rates & Regimes for FY 2023-24
| Type of Company | Tax Regime | Base Tax Rate | Effective Tax Rate (incl. surcharge & cess) | Conditions/Remarks |
|---|---|---|---|---|
| Domestic Company | Regular Regime (Turnover ≤ ₹400 crore in FY 2021-22) | 25% | Up to 29.12% | Standard deductions & exemptions available |
| Regular Regime (Turnover > ₹400 crore in FY 2021-22) | 30% | Up to 34.94% | Standard deductions & exemptions available | |
| Section 115BAA | 22% | 25.17% | No specified deductions; flat surcharge rate of 10% | |
| Manufacturing Company (Set up on or after 1st Oct 2019) |
Section 115BAB | 15% | 17.16% | For new manufacturing companies; specific conditions apply |
| Foreign Company | Standard | 40% | Up to 43.68% | Higher tax rates; can avail DTAA benefits if applicable |
| LLP | Standard | 30% | Up to 34.94% | Flat rate irrespective of income |
How to Compute Corporate Tax: Step-by-Step
Determine Gross Total Income
Compute the company's total income from all sources, including business income, capital gains, and other incomes.
Apply Applicable Deductions
Subtract eligible deductions such as depreciation, business expenses, research and development expenses, and other allowable deductions under the tax regime chosen.
Calculate Net Taxable Income
After applying all deductions, you get the net taxable income of the company.
Apply the Appropriate Tax Rate
Apply the base tax rate according to the type of company and the tax regime chosen (e.g., 22% under Section 115BAA, 30% under the regular regime for large companies).
Calculate Surcharge
Add applicable surcharge, which varies based on the total income and type of company:
- For domestic companies under regular regime: 7% (income > ₹1 crore but ≤ ₹10 crores) or 12% (income > ₹10 crores)
- For companies under Section 115BAA or 115BAB: Flat 10%
- For foreign companies: 2% (income > ₹1 crore but ≤ ₹10 crores) or 5% (income > ₹10 crores)
Add Health and Education Cess
Apply 4% Health and Education Cess on the sum of tax and surcharge.
Check for Minimum Alternate Tax (MAT)
Verify if MAT is applicable (for companies not under Sections 115BAA/BAB). If MAT is higher than regular tax, the company must pay MAT.
Adjust Tax Credits
Deduct any available tax credits such as TDS/TCS, advance tax paid, foreign tax credit, or MAT credit from previous years.
Key Deductions & Tax Benefits
Regular Tax Regime Deductions
- Depreciation: Deduction for wear and tear of business assets
- Scientific Research: Enhanced deductions for in-house R&D (Section 35)
- Donations: Eligible charitable donations (Section 80G)
- Capital Expenditure: Special provisions for specific industries
- SEZ Units: Tax holidays for Special Economic Zone units
- Startups: Tax benefits for eligible startups (Section 80-IAC)
Alternate Tax Regime Considerations
Companies opting for Section 115BAA/BAB cannot claim:
- Additional depreciation
- SEZ exemptions
- Investment-linked deductions
- Certain Chapter VI-A deductions
- Set-off of unabsorbed depreciation from earlier years (for specific provisions)
Companies under these sections are also exempt from Minimum Alternate Tax (MAT).
Understanding Minimum Alternate Tax (MAT)
MAT ensures that companies showing book profits but paying minimal or no tax due to various deductions and exemptions pay a minimum tax on their book profits. MAT is currently levied at 15% (plus applicable surcharge and cess) on the book profit of a company.
MAT Calculation
Book Profit = Net profit as per Statement of Profit and Loss
Adjusted for specified additions and deductions under Section 115JB
MAT = 15% of Adjusted Book Profit (plus surcharge and cess)
MAT Credit
- When a company pays MAT, the excess of MAT over normal tax can be carried forward as MAT credit
- MAT credit can be utilized in future years when normal tax exceeds MAT
- MAT credit can be carried forward for up to 15 assessment years
- Companies under Section 115BAA or 115BAB are exempt from MAT, but existing MAT credit can be used if specific conditions are met
Corporate Tax Planning Strategies
Choosing the Right Tax Regime
Companies should compare the regular tax regime with special regimes (Section 115BAA/BAB) to determine which offers more benefits:
- Regular Regime: Better for companies with substantial exemptions and deductions that exceed the benefit of lower tax rates
- Section 115BAA (22%): Beneficial for companies with limited deductions or those with exhausted tax incentives
- Section 115BAB (15%): Most beneficial for new manufacturing entities established after October 1, 2019
Optimizing Deductions and Allowances
- Ensure timely payment of statutory dues to avoid disallowances
- Properly document and substantiate business expenses
- Plan capital expenditures to optimize depreciation benefits
- Consider investing in specified sectors that offer tax incentives
- Explore restructuring options to optimize the tax position
- Maintain proper transfer pricing documentation for international transactions
Frequently Asked Questions
For companies, the due date for filing income tax returns depends on whether transfer pricing provisions apply:
- Companies with no international/specified domestic transactions: October 31 of the assessment year
- Companies subject to transfer pricing provisions: November 30 of the assessment year
Companies must file their returns using ITR-6 form. The financial year in India runs from April 1 to March 31, and the following year is considered the assessment year.
For regime switching:
- Regular to Section 115BAA: Companies can switch from the regular tax regime to Section 115BAA in any financial year. Once opted, this choice is irrevocable.
- Section 115BAA to Regular: Once a company opts for Section 115BAA, it cannot switch back to the regular regime.
- Section 115BAB: This option must be exercised in the first year of operation and is irrevocable.
Companies should carefully analyze long-term implications before switching tax regimes, as the decision cannot be reversed.
From April 1, 2020, the Dividend Distribution Tax (DDT) regime has been abolished. Key changes include:
- Companies no longer pay DDT on dividends distributed
- Dividends are now taxable in the hands of the recipients at their applicable income tax rates
- Companies must deduct TDS at 10% for dividend payments exceeding ₹5,000 to residents (7.5% TDS rate for FY 2020-21)
- For non-residents, TDS is deducted as per treaty rates or domestic law, whichever is more beneficial
- Domestic companies can claim deduction for dividends received from other domestic companies to avoid cascading tax effect
This shift from company-paid DDT to shareholder-level taxation aligns with the classical system of dividend taxation followed globally.
To qualify for the concessional 15% tax rate under Section 115BAB, companies must meet all these conditions:
- The company must be incorporated on or after October 1, 2019
- The company must commence manufacturing or production on or before March 31, 2024
- The company's business should be manufacturing or production of any article or thing
- The company should not use any plant or machinery previously used for any purpose
- The company should not use any building previously used as a hotel or convention center
- The company is not formed by splitting up or reconstruction of an existing business
- The company does not engage in specified excluded businesses (like development of computer software, mining, etc.)
The company must exercise this option in its first income tax return and cannot subsequently opt out of this regime.
Limited Liability Partnerships (LLPs) have different tax treatment compared to companies:
- Tax Rate: LLPs are taxed at a flat rate of 30% (plus applicable surcharge and cess), regardless of turnover
- Surcharge: 12% surcharge if total income exceeds ₹1 crore
- Alternate Minimum Tax (AMT): LLPs are subject to AMT at 18.5% (plus surcharge and cess) if tax payable is less than AMT
- Dividend Distribution: Profit distribution to partners is not taxable in the hands of partners (unlike dividends from companies, which are taxable)
- Special Regimes: LLPs cannot opt for concessional tax regimes like Section 115BAA or 115BAB
The choice between company and LLP structure should consider these tax implications along with other business and regulatory factors.