Publish Date: April 30, 2023
In this article we shall take a look at what is the income tax rate applicable for domestic companies as well as for foreign companies in India for A.Y. 2024-25.
The Income Tax Act, 1961 levies a corporate tax on domestic as well as foreign companies. The Government of India, through this Act, mandates domestic companies to pay corporate taxes based on their universal income. On the other hand, foreign companies are only taxed on their income accrued or received in India.
The Indian government levies corporate taxes on enterprises as a source of income. The calculation of this tax is premised upon the net income of a company. These are the types of income that a company earns –
(a) Profits Earned by the Business
(b) Income From Renting a Property
(c) Capital Gains
(d) Income from Other Sources
Companies, both domestic and foreign, are liable to pay an annual corporate tax. It is, therefore, based on the above income earned in a given financial year.
Normal Income-tax rates applicable in case of domestic companies are as follows:
| Turnover Criteria | Tax Rate |
| Where its total turnover or gross receipt during the previous year 2021-22 does not exceed Rs. 400 crore | 25% |
| Any other domestic company | 30% |
Surcharge : The amount of income-tax shall be increased by a surcharge at the specified rate percentage of such tax:-
| Range of Income | Rs. 1 Crore to Rs.10 Crore | Above Rs. 10 Crore |
| Surcharge Rate | 7% | 12% |
Note: The surcharge shall be subject to marginal relief.
Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4 percent of such income-tax and surcharge.
The special Income-tax rates applicable in case of domestic companies are as follows:
| Domestic Company | Tax Rate |
| Where it opted for section 115BA | 25% |
| Where it opted for Section 115BAA | 22% |
| Where it opted for Section 115BAB | 15% |
Surcharge: The rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be flat 10% irrespective of amount of total income.
Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4 percent of such income-tax and surcharge.
MAT : The domestic company who has opted for special taxation regime under Section 115BAA & 115BAB is exempted from provision of MAT. However, no exemption is available in case where section 115BA has been opted
In that case, the provisions of Minimum Alternate Tax (MAT) applies, tax payable cannot be less than 15% (+HEC) of “Book profit” computed as per section 115JB.
However, MAT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange.
Income-tax rates applicable in case of domestic companies are as follows:
| Nature of Income | Tax Rate |
| Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government | 50% |
| Any other income | 40% |
Surcharge : The amount of income-tax shall be increased by a surcharge at the specified rate percentage of such tax:-
| Range of Income | Rs. 1 Crore to Rs.10 Crore | Above Rs. 10 Crore |
| Surcharge Rate | 2% | 5% |
Note: However, the surcharge shall be subject to marginal relief.
Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4 percent of such income-tax and surcharge.
