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Last updated on: July 29, 2025
Corporate tax is a levy imposed by governments on the profits earned by companies and other business entities. It is a major source of revenue for countries, funding public services and infrastructure. Corporate tax rates, rules, and calculations vary globally, often including allowances for deductible expenses, tax credits, and incentives for certain activities or sectors. Companies must regularly file tax returns to report income, claim deductions, and determine their tax liability. Understanding corporate tax is crucial for business compliance, strategic financial planning, and minimizing legal risks. The tax landscape is dynamic, with ongoing reforms and debates about optimal rates to balance economic growth and public funding needs.
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Read BioCorporate tax is a direct tax imposed on profits of corporations and companies by the government. Corporate tax has been of utmost importance to the formation of economic policies, financing infrastructure, and welfare schemes in India. As India is transitioning into a more digitalised economy by 2025, corporate tax is a factor that every business owner must be aware of whether he/she is starting up or already an existing conglomerate.
Corporate taxes determine how businesses operate, payrolls, research and development expenditure, expansion and cause a great impact to ease of doing business in India. In 2025, compliance and tax efficiency are two factors that can enable companies to remain competitive and profitable and play their part towards nation building.
Tax Deductions and Exemptions of Corporate Tax: What Can Companies Get? As per the Government of India, corporate tax collections constitute approximately 25 percent of the total tax collection in India every year.
In India, corporate tax is levied on both local and foreign-based companies that are operating in the country. The profits are calculated according to the Income Tax Act, 1961 with allowable deductions. India has a slab and regime- based structure and provisions of reduced tax in some cases.
| Company Type | Tax Regime | Tax Rate (2025) | Surcharge | Health & Education Cess | Effective Rate |
|---|---|---|---|---|---|
| Domestic (Turnover ≤ 400 Cr) | Normal Regime | 22 percent | 10 percent | 4 percent | 25.17 percent |
| Newly Incorporated Manufacturing | Section 115BAB | 15 percent | 10 percent | 4 percent | 17.16 percent |
| Other Domestic Companies | Normal Regime | 30 percent | 12 percent | 4 percent | 34.94 percent |
| Foreign Companies | According to IT Act | 40 percent | 2 to 5 percent | 4 percent | 42.43 percent |
Tax slabs above effective after surcharges and cess in 2025. Low rates are offered on some conditions
Tax Planning: Tax experts advise that tax planning should be done early enough so that one can choose the most appropriate regime that applies to the business. Certain concessions are under one-time options and lock-in conditions.
The calculation of corporate tax is based on book profit of the company after deducting the necessary adjustments as per the Income Tax Act. Add revenues, reduce permissible expenses, adjust depreciation, add non-allowable expenses, and consider special provisions like Minimum Alternate Tax (MAT). Charge the appropriate tax rate, surcharge and education cess and, subtract the eligible credits.
Take the example of an Indian manufacturing firm whose turnover is less than 400 crore and whose books show profits of 5 crore in the FY 2024-25.
Do companies pay taxes on their dividend incomes of subsidiaries in 2025?
Yes, dividend is subjected to tax in the hands of the recipient as per applicable rates since the abolishment of DDT.
Tax Deductions and Exemptions of Corporate Tax: What Can Companies Get? In 2019, India simplified its concessional taxation regime, and in 2025, the country will continue to offer one of the most competitive tax rates in Asia to manufacturers.
Being a business consultant in Mumbai and Delhi, I have completed tax filing on behalf of my clients, which include e-commerce, IT, and FMCG companies. Certain companies would choose the concessional regime to reduce upfront tax whereas others would choose the old regime as they have unutilised depreciation and loss set-off.
I have found out that:
Expert Insight: In 2025, it is possible to compare the audit, return filing, and tax planning charges of different well-known CA firms by getting connected to the online corporate tax marketplace platforms.
As digital India becomes a reality, majority of the companies are using cloud-based accounting and tax filing software. The rate of country corporate tax in 2025 Surcharge Total Special Regime
These are tools that prevent manual errors and enable compliance in a timely manner.
What are the consequences in case a company does not file returns in time?
There is penalty charged and you can lose the freedom to carry forward some of the losses.
| Country | Tax Rate | Surcharge | Notes |
|---|---|---|---|
| Singapore | 17 percent | Nil | SME rebates |
| India | 15 to 30 percent | Yes (Up to 12 percent) | New Manufacturing 15 percent |
| USA | 21 percent | Nil | Global minimum tax proposals |
| UK | 25 percent | Nil | Patent box |
| China | 25 percent | 0 percent | 15 percent high tech concession |
The low 15 percent tax rate on manufacturing in India is a factor that other companies establishing manufacturing plants and research and development centres have to look forward to.
Did ye know it?
India is a signatory to international deal on cross border tax to align with OECD policies
By 2025, the digitised income tax portal in India is doing almost all corporate assessments online, wherein risk profiling is done with AI.
Is it possible to choose the new tax regimes in 2025 by the private limited companies?
Yes, but the company is not allowed to take some deductions or brought forward losses under the new regime.
The online marketplaces and digital compliance tools have made the filing easier.
Corporate tax in India 2025 is applicable to all the registered companies and varies between 15 and 30 percent, along with special schemes of manufacturing and start-ups. Compliance is becoming online and more and more simple to use online marketplaces and cloud platforms. Business should plan to pay taxes early, maximise on legal tax write offs and use the approved online channels to comply with tax laws to prevent penalties and maximise tax outflow.
What is corporate tax and why do companies have to pay it in India?
Corporate tax is a direct tax that is levied on the profits of the company. It is the legal amount paid by companies to national revenue.
Will there be corporate taxes in 2025?
Normal, concessional manufacturing, and special start-up regimes.
What is the new corporate tax rate of new manufacturing companies in 2025?
Effective rate is 17.16 percent inclusive of surcharge and cess.
Are losses incurred by companies transferrable to future profits?
Yes, under certain conditions and depending on the regime that is in place.
What will be the consequence of a company failing to pay advance tax on due date?
Interest and penalty are levied according to the Income Tax act.
Income Tax Department, Government of India, CBDT Press Release 2025
Yes, transactions involving digital and virtual assets are taxable and need a special compliance.
Are tax rule changes in the world in 2025 relevant to Indian companies?
Yes, in particular, companies that have cross-border operations should pay attention to BEPS and OECD guidelines.
What is the best resource to find out about the new changes in the corporate tax?
Go to the Income Tax India site or a professional chartered accountant.
How could we improve this article?
Written by Prem Anand, a content writer with over 10+ years of experience in the Banking, Financial Services, and Insurance sectors.
Prem Anand is a seasoned content writer with over 10+ years of experience in the Banking, Financial Services, and Insurance sectors. He has a strong command of industry-specific language and compliance regulations. He specializes in writing insightful blog posts, detailed articles, and content that educates and engages the Indian audience.
The content is prepared by thoroughly researching multiple trustworthy sources such as official websites, financial portals, customer reviews, policy documents and IRDAI guidelines. The goal is to bring accurate and reader-friendly insights.
This content is created to help readers make informed decisions. It aims to simplify complex insurance and finance topics so that you can understand your options clearly and take the right steps with confidence. Every article is written keeping transparency, clarity, and trust in mind.
Based on Google's Helpful Content System, this article emphasizes user value, transparency, and accuracy. It incorporates principles of E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness).
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