Corporation Tax Rates For FY 2015-16 & 2016-17 India

Published On - March 6, 2016

admin Income-tax Act, 1961

Corporation-Tax
Corporation tax is the biggest worry of startups companies nowadays.
After all it is tax on the total earning of a company and covers a major portion.
Corporation tax is the tax levied on the companies earning by income tax department.
It is also called as corporate tax.
Every year finance act fixes the corporation tax in advance.
For example finance Act 2016 fixed the corporation tax for Financial Year 2016-17
The corporation tax rates can be divided into following categories:

  • Basic Corporate tax rate levied on net profit.
  • Surcharge levied on tax calculated by basic corporate tax rate.
  • Educational Cess @ 1% levied on (Basic Corporate tax + Surchage)
  • Secondary & Higher Education Cess @2% levied on (Basic Corporate tax + Surchage)
  • Minimum Alternative Tax (MAT) is levied if the Basic corporate tax is less than MAT. In other words, if tax paid as per basic rate is less than MAT, and then at least MAT is paid.  MAT is further increased by surcharge, educational Cess and Secondary & higher education cess.

The corporation tax for Indian company and foreign company are different.

Corporation tax rate for financial year 2015-16

S.No. Particulars Tax Surcharge EC S & H Cess Effective Tax
2 Domestic Companies with total income less than 1 Cr. 30 Nil 2 1 30.9
3 Domestic Companies with total income more than 1 Cr but less than 10 Cr. 30 7 2 1 33.063
4 Other Domestic Companies 30 12 2 1 34.608
5 Foreign Companies with total income less than 1 Cr. 40 Nil 2 1 41.2
6 Foreign Companies with total income more than 1 Cr but less than 10 Cr. 40 2 2 1 42.024
7 Other Foreign Companies 40 5 2 1 43.26

Corporation Tax Rate for Financial year 2016-17

In case of domestic company, the rate of corporate tax shall be 29% of the taxable profit if the total turnover or gross receipts of the company in the previous year 2014-15 does not exceed Rs. 5 crore and in all other cases the rate of Income tax shall be 30% of the taxable profit.
According to Section 115BA, the corporation tax rate shall be 25% of the taxable profit. It is optional for the company to choose this rate. The company will also have to follow the following conditions.
(i) the company must be registered on or after 1st day of March, 2016;
(ii) the company is engaged in the business of manufacture or production of any article or thing and is not engaged in any other business;
(iii) the company while computing its taxable income has not claimed any benefit under section 10AA, benefit of accelerated depreciation, benefit of additional depreciation, investment allowance, expenditure on scientific research and any deduction in respect of certain income under Part-C of Chapter-VI-A other than the provisions of section 80JJAA; and
(iv) the option is furnished in the prescribed manner before the due date of furnishing of income.
For others the corporate tax rates are as follows:

S.No. Particulars Tax Surcharge EC S & H Cess Effective Tax
1 Domestic Companies with total turnover less than 5 Cr. 29 Nil 2 1 29.87
2 Domestic Companies with total income less than 1 Cr, but turnover exceeds Rs. 5 crore. 30 Nil 2 1 30.9
3 Domestic Companies with total income more than 1 Cr but less than 10 Cr. 30 7 2 1 33.063
4 Other Domestic Companies 30 12 2 1 34.608
5 Foreign Companies with total income less than 1 Cr. 40 Nil 2 1 41.2
6 Foreign Companies with total income more than 1 Cr but less than 10 Cr. 40 2 2 1 42.024
7 Other Foreign Companies 40 5 2 1 43.26

Minimum Alternate Tax rates are same for Financial Year 2015-16 & 2016-17

S.No. Particulars Tax (%) Surcharge (%) E.Cess (%) S & H Cess (%) Effective Tax (%)
1 Domestic Companies with total income less than 1 Cr. 18.5 Nil 2 1 19.055
2 Domestic Companies with total income more than 1 Cr but less than 10 Cr. 18.5 7 2 1 20.389
3 Other Domestic Companies 18.5 12 2 1 21.342
4 Foreign Companies with total income less than 1 Cr. 18.5 Nil 2 1 19.06
5 Foreign Companies with total income more than 1 Cr but less than 10 Cr. 18.5 2 2 1 19.44
6 Other Foreign Companies 18.5 5 2 1 20.01