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Corporate Tax

Updated on March 11, 2023

Corporate tax is the tax levied on the companies that carry out their business or operations in the country. According to the Income Tax Act, 1961, corporate tax is levied on domestic as well as foreign companies on the profits made by such entities during a financial year.

Domestic companies are required to pay corporate tax on their universal income while foreign companies are required to pay corporate tax on their income accrued in India.

The income of a company is computed by including income from various sources like profits and gains from the business, income from capital gains, income from house property, and income from other sources.

The corporate tax structure of a country is one of the many incentives that attract foreign companies to set up their operations or register the companies in such a country. A country with a lower or nil corporate tax rate will always be preferred by corporations as it is beneficial to their bottom line and helps in providing better returns to the shareholders.

Rates of Corporate Tax in India

Corporate tax rates in India for FY 2022-23 ranges from 15-50% depending upon the Section of the Income Tax applicability and the domicile of a company (Indian or foreign company).

Over this a surcarge of 7-12% and Health & Education Cess are also charged.