Corporate tax is the income tax paid by companies on their profits. If you're running a business as a company (Pvt Ltd, Public Ltd), your company's profits get taxed separately from your personal income. Corporate tax rates are different from personal income tax rates, and they vary based on company turnover, whether you opt for certain tax regimes (like Section 115BAB), and whether you're a domestic or foreign company. Understanding corporate tax helps business owners plan expenses, investments, and dividend distribution.
For FY 2025-26, domestic companies with turnover above ₹50 crore pay tax at 25% (22% if not taking exemptions plus surcharge). Companies with turnover below ₹50 crore pay 25% (effectively lower due to exemptions). Startups and new companies may be eligible for lower rates under Section 115BAB. Foreign companies operating in India pay different rates. Additionally, there's dividend distribution tax when company pays dividends to shareholders. Companies also need to calculate GST liability separately on their sales and services.
Our corporate tax calculator helps you understand your company's tax liability based on profits, deductions, and applicable tax rates. Unlike individual tax where you pay annually through ITR, companies need to pay advance tax quarterly if estimated tax exceeds ₹10,000. This helps you budget for tax payments throughout the year. Also, companies need to comply with GST filing, TDS deduction, and other tax obligations in addition to corporate tax.
For small businesses and professionals operating as proprietorship or partnership, your business income is taxed as personal income, not corporate tax. Use our income tax calculator for those cases. Also, if your company imports or exports goods, check export import tax implications for customs duty and incentives. Understanding complete tax picture helps in better financial planning and compliance.
For complete corporate tax rates, deductions, and compliance requirements, visit the Ministry of Corporate Affairs website at MCA official website which explains company tax rates, Section 115BAB benefits, and annual filing requirements for companies.
Corporate tax planning becomes especially important once a business reaches a stage where profits are significant, recurring, and predictable. Unlike individuals, companies are required to pay tax regardless of withdrawals, and inefficient tax planning can directly impact cash flow, expansion budgets, and shareholder returns.
Businesses that delay tax planning often face last-minute advance tax pressures, interest penalties, and missed opportunities for lawful deductions. Strategic planning throughout the year helps companies smooth out tax payments and align expenses, depreciation, and investments in a tax-efficient manner.
This is particularly relevant for growing startups, profitable SMEs, and companies transitioning from loss-making to profitability, where tax decisions directly influence valuation and long-term sustainability.
Choose the appropriate company type: Domestic (30%), Foreign (40%), Startup (25%), or Small Company (25%).
Input your company's total income for the financial year. This should be the taxable income after all deductions.
For small company classification, enter the annual turnover. Companies with turnover ≤ ₹400 crores may qualify for 25% rate.
Press "Calculate Corporate Tax" to get instant results with detailed breakdown and tax comparisons.
Check the summary cards, detailed breakdown, and charts to understand your tax liability and effective rate.
Use the comparison charts to see how different company structures affect your tax liability.
Tax Optimization:
Compliance:
| Company Type | Basic Rate | Surcharge | Cess | Conditions |
|---|---|---|---|---|
| Domestic Company | 30% | 7% (if income > ₹1 cr) | 4% | General rate |
| Foreign Company | 40% | 7% (if income > ₹1 cr) | 4% | Not incorporated in India |
| Startup Company | 25% | 7% (if income > ₹1 cr) | 4% | Eligible startups |
| Small Company | 25% | 7% (if income > ₹1 cr) | 4% | Turnover ≤ ₹400 cr |
| Income Range | Surcharge Rate | Applicable On |
|---|---|---|
| Up to ₹1 crore | Nil | Basic tax |
| ₹1 crore to ₹10 crores | 7% | Basic tax |
| Above ₹10 crores | 12% | Basic tax |
• Q1: 15th June 2025 - 15% of estimated tax
• Q2: 15th September 2025 - 45% cumulative
• Q3: 15th December 2025 - 75% cumulative
• Q4: 15th March 2026 - 100% of tax liability
• Due Date: 31st October 2026
• Audit Report: 30th September 2026
• Tax Audit: 30th September 2026
• Transfer Pricing: 30th November 2026
A common misunderstanding among business owners is assuming that all income linked to a company automatically falls under corporate taxation. In reality, corporate tax applies strictly to profits earned by the company as a legal entity, not to personal income drawn by directors or shareholders.
Salaries paid to directors, professional fees, interest earned personally, dividends received by shareholders, and capital gains from selling shares are all taxed in the hands of individuals, not the company. These must be calculated separately using individual income tax rules.
In practical assessments, most corporate tax disputes arise not from tax rates but from improper expense classification, unsupported deductions, or inconsistencies between books of accounts and tax filings. Tax officers focus heavily on documentation, audit trails, and consistency across years.
Companies that maintain clean accounting records, reconcile GST, TDS, and income tax figures, and plan advance tax proactively rarely face major adjustments. On the other hand, aggressive tax positions without supporting rationale often lead to notices and prolonged scrutiny.
The most effective corporate tax strategy is not minimizing tax at any cost, but ensuring predictability, compliance, and long-term credibility with authorities and investors.
The basic corporate tax rate for domestic companies is 30%. However, surcharge and cess are applicable based on income levels. Companies with turnover up to ₹400 crores may qualify for 25% rate under certain conditions.
Surcharge is calculated on the basic tax amount. No surcharge is applicable if income is up to ₹1 crore. 7% surcharge is applicable if income is between ₹1 crore and ₹10 crores. 12% surcharge is applicable if income exceeds ₹10 crores.
Domestic companies are those incorporated in India and are taxed at 30% (or 25% if eligible). Foreign companies are those not incorporated in India and are taxed at 40% on their Indian income.
To qualify for startup company benefits, the company must be recognized as a startup by DPIIT, have turnover not exceeding ₹100 crores in any of the previous years, and be incorporated after April 1, 2016.
A small company is one whose paid-up share capital does not exceed ₹4 crores and turnover does not exceed ₹400 crores. Such companies are eligible for 25% tax rate instead of 30%.
Companies must pay advance tax in four installments: 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15. Interest is charged for default or deferment of advance tax.
Late filing of corporate tax returns attracts a penalty of ₹5,000 if filed before December 31, and ₹10,000 if filed after December 31. Additional penalties may apply for non-compliance with other provisions.
Yes, new manufacturing companies incorporated after October 1, 2019, can opt for a 15% tax rate (plus surcharge and cess) if they commence manufacturing before March 31, 2024, and meet certain other conditions.