How corporate tax works in India
India taxes domestic companies on worldwide income and foreign companies on Indian-source income. The financial year runs April to March, and the rate depends on which regime the company elects.
Companies that forgo most exemptions pay a flat 22% plus 10% surcharge and 4% cess, an all-in 25.168%. Qualifying new manufacturers paid 15% all-in at about 17.16%. Standard companies pay 25% or 30% based on turnover, plus graded surcharge and cess.
Minimum alternate tax backstops profitable companies with big deductions. From 1 April 2026 it becomes a 14% final tax, and brought-forward MAT credits can only be used in a limited way before they expire.
Tax rates at a glance
- Concessional rate
- 22%No exemptions
- New manufacturing
- 15%
- Standard small turnover
- 25%
- Standard large turnover
- 30%
- Surcharge
- 7% - 12%
- Cess
- 4%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
FoundersHolding companiesRegional operatorsInvestorsCross-border groups
Watch out for
- The 22% rate means giving up most tax holidays and accelerated depreciation. Companies with large existing incentives should model both regimes before switching, because the election is hard to reverse.
- Surcharge and cess apply on top of every headline rate. A 30% company with income above INR 10 crore pays an effective rate near 35%, not 30%.
- Buybacks are now taxed as capital gains in shareholder hands, with an extra promoter-level charge. Dividend-versus-buyback planning changed materially in 2026.
- Transfer pricing, equalisation-levy history, withholding on payments to non-residents and state-level levies can all move the real burden beyond the corporate rate.
Frequently asked questions
Does India have corporate tax?
Yes. Domestic companies pay 22%, 25% or 30% depending on the regime and turnover, plus surcharge and a 4% cess.
What is the lowest corporate tax rate in India?
Qualifying new manufacturing companies paid 15% plus surcharge and cess, about 17.16% all-in. Other companies opting out of exemptions pay 22%, about 25.17% all-in.
What is minimum alternate tax in India?
It is a backstop on book profits for companies claiming large deductions. From April 2026 it is a 14% final tax, and old MAT credits face strict limits.