Corporate tax, also known as corporation tax, is a direct tax charged on the net income, capital gains, and profits of domestic and foreign companies. It is levied as per the provisions of the Income Tax Act, 1961. The applicable tax rate depends on the type of company and its earnings. Domestic and foreign companies are taxed differently based on specified slab rates.
Benefits of Corporate Tax Filing in India
Can Retain Profit for Efficient Tax Planning: Proper tax planning allows businesses to retain profits for reinvestment and expansion, ensuring steady financial growth.
Easily Write Off the Loss: Corporates can easily write off losses incurred, unlike individual proprietors, providing tax relief and financial flexibility.
Deductibility of Business Expenses: Corporate tax returns allow the deduction of legitimate business expenses, such as employee health insurance, lowering tax liability while supporting staff welfare.
Access to Better Financial Instruments: Regular tax filing helps businesses invest in retirement plans and trusts, improving long-term financial management.
Documents Required for Corporate Tax Filing
Here are the essential documents needed for filing business tax returns:
ITR-1: For domestic companies with total income up to ₹50 lakh.
ITR-2: For companies earning above ₹50 lakh.
ITR-3: For companies engaged in banking, insurance, or financial services.
ITR-6: For companies not claiming deductions under Section 11.
ITR-7: For companies registered under Section 8 of the Companies Act, 2013.
Corporate Tax Filing for Different Entity Types
Proprietorship Firm:
Must file returns if earning business income.
Audit mandatory if turnover exceeds ₹1 crore (business) or ₹50 lakh (profession).
Due date: July 31 (no audit), September 30 (audit).
Forms: ITR 3 or ITR 4 Sugam.
LLP Tax Return:
All registered LLPs must file returns, even with zero income.
Due by October 31; November 30 for international transactions.
Filed via Form ITR 5 (online).
Checklist for Corporate Tax Filing in India
Verify Eligibility under the Income Tax Act, 1961.
Select the correct ITR Form.
Gather PAN, registration certificate, income/expense records, and TDS certificates.
Compute taxable income after deducting allowable expenses.
Pay outstanding taxes before filing.
Choose between online and offline filing modes.
Register on the Income Tax e-Filing Portal.
Foreign Companies:
Obtain PAN and register with the Income Tax Department.
Deduct TDS on payments to Indian entities.
Claim foreign tax credits via Form 67.
Current Corporate Tax Rate in India (AY 2025-26)
25%: Domestic companies with turnover up to ₹400 crore in FY 2021-22.
25%: Companies opting for taxation under Section 115BA.
22%: Companies opting for Section 115BAA.
15%: Companies opting for Section 115BAB.
30%: Other domestic companies.
Surcharge:
7%: Taxable income exceeds ₹1 crore but does not exceed ₹10 crore.
12%: Taxable income exceeds ₹10 crore.
10%: For companies under Section 115BAA or 115BAB.
4% Health and Education Cess applies on total tax plus surcharge.
Minimum Alternate Tax (MAT): 15% on book profit (AY 2025-26).
Foreign Companies:
50%: Royalty/technical service fees under pre-1976 agreements.