Corporate Tax in India 2026: Rates, Regimes (115BAA/115BAB) & Planning
Understanding corporate tax is essential for accurate profit projections in India. This guide breaks down the rates, the concessional regimes, minimum alternate tax, and practical planning for domestic and foreign-owned companies.
Domestic vs foreign companies
A company incorporated in India is a domestic company and enjoys lower rates than a foreign company's Indian branch — a key reason foreign investors prefer a subsidiary over a branch office.
The concessional regimes
- Section 115BAA: existing domestic companies can opt for a lower flat rate by giving up most deductions and exemptions.
- Section 115BAB: new manufacturing companies (set up and registered within the eligibility window) get an even lower special rate.
Both are optional and, once chosen, generally cannot be reversed — so model the numbers before electing.
Surcharge and cess
On top of the base rate, a surcharge applies based on income slabs, plus a 4% health and education cess. Companies under 115BAA/115BAB have a capped surcharge.
Minimum Alternate Tax (MAT)
MAT ensures profitable companies claiming large deductions still pay a minimum tax on book profits. Companies electing 115BAA/115BAB are exempt from MAT, which is a major advantage.
Computing taxable income
Start from accounting profit, then apply tax adjustments — add back disallowed expenses, apply tax depreciation, and account for brought-forward losses. Accurate books and reconciliation are critical.
Planning tips
- Compare the old regime (with deductions) vs 115BAA before electing
- New manufacturers should evaluate 115BAB carefully
- Plan advance-tax instalments to avoid 234B/234C interest
- Document related-party transactions for transfer pricing
Statura runs a regime comparison for your company and manages corporate tax filing and planning.