Corporate tax is the tax companies pay on their profits. In India, corporate tax rates have changed several times over the past decade to encourage business growth and investment.
Let’s take a look at how the tax rates have evolved in the last 10 years.
Corporate Tax Rates from 2015 to 2025
2015-16 to 2018-19
- Domestic Companies: 30% (for companies with a turnover above ₹250 crore) and 25% (for companies with turnover up to ₹250 crore)
- Foreign Companies: 40%
2019-20
- The government reduced the corporate tax rate to 22% for domestic companies that do not avail of exemptions or incentives.
- A special % lower tax rate of 15% was introduced for new manufacturing companies set up after October 1, 2019.
- Foreign companies continued to be taxed at 40%.
2020-21 to 2024-25
- Existing Domestic Companies: 22% (without exemptions) and 25% (with exemptions)
- New Manufacturing Companies: 15%
- Foreign Companies: 40%
Impact of Corporate Tax Changes
- Boost for Businesses: Lower tax rates encouraged more investments in India.
- Manufacturing Growth: The 15% tax rate attracted many companies to set up manufacturing units in India.
- Foreign Investments: Competitive tax rates made India a favorable destination for global businesses.
Corporate Tax Rate in India (2015-2025)
Here a table of the corporate tax rate in India from 2015-2025.
| Financial Year | Domestic Companies (Turnover > ₹250 Cr) | Domestic Companies (Turnover ≤ ₹250 Cr) | New Manufacturing Companies | Foreign Companies |
|---|---|---|---|---|
| 2015-16 | 30% | 30%* | N/A | 40% |
| 2016-17 | 30% | 30%* | N/A | 40% |
| 2017-18 | 30% | 25% | N/A | 40% |
| 2018-19 | 30% | 25% | N/A | 40% |
| 2019-20 | 22% (no exemptions) | 22% (no exemptions) | 15% (set up after Oct 1, 2019) | 40% |
| 2020-21 | 22% (no exemptions) or 25% (with exemptions)** | 22% (no exemptions) or 25% (with exemptions)** | 15% | 40% |
| 2021-22 | 22% (no exemptions) or 25% (with exemptions)** | 22% (no exemptions) or 25% (with exemptions)** | 15% | 40% |
| 2022-23 | 22% (no exemptions) or 25% (with exemptions)** | 22% (no exemptions) or 25% (with exemptions)** | 15% | 40% |
| 2023-24 | 22% (no exemptions) or 25% (with exemptions)** | 22% (no exemptions) or 25% (with exemptions)** | 15% | 40% |
| 2024-25 | 22% (no exemptions) or 25% (with exemptions)** | 22% (no exemptions) or 25% (with exemptions)** | 15% | 40%*** |
Conclusion
India has significantly reduced corporate tax rates in the last 10 years to make businesses more competitive. These tax changes have helped boost investment and economic growth.
For businesses, understanding these tax rates is essential for financial planning and compliance.
If you are a business owner, consult a tax expert to make the most of available tax benefits.
