Corporate taxation in India is a critical responsibility for every company operating in the country. From determining the right tax rate to meeting filing deadlines and audit requirements, corporate tax rules and compliance for Indian companies demand accuracy and timely action.
For FY 2024–25 (AY 2025–26), corporate tax continues to be governed by the Income Tax Act, 1961, with compliance monitored by authorities such as the Central Board of Direct Taxes (CBDT) and the Ministry of Corporate Affairs (MCA). This guide explains tax rates, regimes, filing requirements, and key compliance obligations in simple terms.
What Is Corporate Tax in India?
Corporate taxation refers to the tax levied on profits earned by companies operating in India. Business income is taxable on a net income basis, calculated after considering allowable expenses, disallowances, and deductions under Indian tax law.
Corporate tax compliance is essential not only to avoid penalties but also to ensure smooth business operations and investor confidence.
Corporate Tax Rates in India for FY 2024–25
India follows a structured corporate tax system with different rates based on turnover and optional concessional regimes.
Standard Corporate Tax Rate
- 25% for domestic companies with annual turnover up to ₹400 crore
- This rate applies to companies that do not opt for concessional regimes
Companies with turnover of ₹400 crore or less during the specified base year can continue paying tax at this rate.
Concessional Corporate Tax Regimes
Companies can opt for lower tax rates under specific sections of the Income Tax Act.
- Section 115BAA (optional for domestic companies)
- Base tax rate: 22%
- Effective tax rate: 25.17% (including surcharge and cess)
- Section 115BAB (new manufacturing companies)
- Base tax rate: 15%
- Effective tax rate: 17.16%
- Available to eligible manufacturing companies incorporated after a specified date
These concessional regimes require companies to forgo certain deductions and exemptions.
Surcharge and Health & Education Cess
Corporate tax rates include surcharge and health and education cess.
For resident companies:
- 0% surcharge if income is within the basic threshold
- 7% surcharge if total income exceeds ₹1 crore but does not exceed ₹10 crore
- 12% surcharge if total income exceeds ₹10 crore
For foreign companies:
- 2% surcharge if income exceeds ₹1 crore
- 5% surcharge if income exceeds ₹10 crore
Additionally, a 4% health and education cess applies to the total tax payable.
Corporate Tax Filing Deadlines
Companies, including foreign companies, must file their income tax return on or before 31st October following the end of the financial year.
For AY 2025–26, the due date remains:
- 31 October 2025 (for companies requiring audit)
Late filing can attract interest, penalties, and loss of carry-forward benefits.
Tax Audit and Reporting Requirements
Tax Audit Applicability
Companies crossing specified turnover or income thresholds must have their accounts audited.
Tax audit ensures:
- Correct computation of income
- Proper disclosure of transactions
- Compliance with tax laws
Audit reports must be filed electronically within prescribed timelines.
Transfer Pricing and Cross-Border Compliance
Companies engaged in international transactions must comply with:
- Transfer pricing regulations
- Documentation and reporting requirements
- Arm’s length pricing norms
From tax rates to cross-border compliance and dividend taxation, Indian corporate tax law covers a wide compliance spectrum.
Corporate Compliance Under Companies Act, 2013
Corporate tax compliance goes hand in hand with company law compliance.
Key obligations include:
- ROC filings with the MCA
- Annual financial statements and annual returns
- Director disclosures and board resolutions
- Compliance with other applicable laws
Company compliance requirements in India are designed to ensure transparency, accountability, and ethical operations.
Indirect Taxes and Other Obligations
Apart from corporate income tax, companies must also comply with:
- Goods and Services Tax (GST) under the 101st Constitutional Amendment Act
- TDS and TCS provisions
- Dividend distribution and withholding tax rules
Corporate tax compliance and reporting is a requirement in nearly every jurisdiction globally, and India is no exception.
Why Corporate Tax Compliance Matters
Breaking tax rules can result in:
- Heavy penalties and interest
- Prosecution in serious cases
- Reputational damage
Corporate tax compliance is essential for the long-term success of any business venture.
Practical Tips for Corporate Tax Compliance
- Choose the tax regime after evaluating long-term impact
- Maintain accurate books and documentation
- Track filing and audit deadlines carefully
- Stay updated with CBDT notifications and MCA changes
- Seek professional advice for complex transactions
Proactive planning reduces risks and improves tax efficiency
Final Thoughts: Compliance Is a Business Essential
Understanding corporate tax rules and compliance for Indian companies is not just about meeting legal requirements—it’s about building a strong, credible business. With multiple tax regimes, surcharges, audits, and regulatory filings, staying compliant requires planning and precision.
By keeping accurate records, meeting deadlines, and choosing the right tax structure, companies can operate confidently and focus on growth in AY 2025–26 and beyond.
