New Income Tax Slabs for Domestic Companies FY 2025-26

Taxation plays a pivotal role in shaping a company’s financial health. For domestic companies in India, income tax rates vary based on turnover, applicability of concessional tax regimes, and other factors. With the introduction of new tax regimes such as Section 115BAA and 115BAB, companies now have more options to reduce their tax burden legally.

Whether you are a small business or a large corporation, understanding the nuances of income tax slabs can help you make informed decisions. Additionally, tools like Bajaj Finserv’s EMI Calculator can assist in financial planning, especially if you are considering investments like buying commercial property or expanding your operations.

A domestic company, as defined under Indian tax laws, is a company registered in India under the Companies Act. It includes public and private limited companies but excludes foreign companies operating in India.

Tax slabs are essential because they determine the rate at which companies are taxed based on their income. Adopting the right tax regime and leveraging available deductions can significantly impact a company’s profitability and cash flow.

For FY 2025-26, domestic companies are subject to the following tax rates:

Normal Tax Regime

1. Companies with turnover up to Rs. 400 crore (in the previous financial year): Tax rate of 25%.
2. Companies with turnover exceeding Rs. 400 crore: Tax rate of 30%.

Concessional Tax Regimes (Optional)

1. Section 115BAA: Tax rate of 22% (excluding surcharge and cess) for companies that do not claim certain deductions.
2. Section 115BAB: Tax rate of 15% (excluding surcharge and cess) for new manufacturing companies incorporated after 1st October 2019.

Section 115BAA

This regime offers a flat tax rate of 22% and is available to companies that forego certain deductions and exemptions, such as accelerated depreciation and MAT credit. It is ideal for companies with minimal deductions and high taxable income.

Section 115BAB

Designed for new manufacturing companies, this regime provides a concessional tax rate of 15%. To qualify, companies must be incorporated after 1st October 2019 and commence manufacturing by 31st March 2024.

Other Regimes

Companies can also opt for reduced tax rates under specific provisions if they meet eligibility criteria. However, once a concessional regime is chosen, it cannot be reversed.

Domestic companies can reduce their taxable income by leveraging deductions and exemptions, such as:

• R&D Expenditure: Companies investing in research and development can claim deductions under Section 35.
• Depreciation: Accelerated depreciation on certain assets is available under the Income Tax Act.
• Startup Incentives: Eligible startups can claim tax holidays under Section 80-IAC.

Pro Tip: Evaluate your eligibility for deductions before opting for concessional tax regimes, as many deductions are not available under these regimes.

Let us consider a practical scenario:

Example

A domestic company with a turnover of Rs. 300 crore in FY 2024-25 and taxable income of Rs. 50 crore opts for the normal tax regime.

1. Tax Rate: 25%
2. Tax Payable: Rs. 50 crore × 25% = Rs. 12.5 crore
3. Surcharge: 7% of tax payable (if income exceeds Rs. 1 crore) = Rs. 0.875 crore
4. Cess: 4% of tax and surcharge = Rs. 0.535 crore

Total Tax Liability: Rs. 12.5 crore + Rs. 0.875 crore + Rs. 0.535 crore = Rs. 13.91 crore

Use tools like Bajaj Finserv’s EMI Calculator to estimate monthly liabilities if you are planning capital investments to offset tax liabilities.

Domestic companies must file Form ITR-6 by 31st October of the assessment year. Ensure the following:

• Accurate computation of income and tax liability.
• Submission of audited financial statements.
• Payment of advance tax to avoid interest penalties under Section 234B and 234C.

1. Opt for the right tax regime: Evaluate the benefits of concessional tax rates versus deductions under the normal regime.
2. Invest in infrastructure: Capital investments can lead to depreciation benefits.
3. Claim R&D incentives: If applicable, maximise deductions for innovation-related expenses.

1. Incorrect computation: Errors in taxable income calculation can lead to penalties.
2. Missed deadlines: Late filing attracts penalties under Section 234F.
3. Ignoring deductions: Many companies fail to claim eligible deductions, increasing their tax liability unnecessarily.

Accurate tax filing requires efficient tools. Bajaj Finserv’s EMI Calculator can simplify financial planning for companies investing in growth. Additionally, consider professional tax software or consulting services to ensure compliance.

Understanding income tax slabs and planning accordingly is essential for domestic companies to optimise their tax liabilities and ensure compliance. Whether you choose the normal tax regime or a concessional option, staying informed about deductions, exemptions, and filing requirements can save significant costs.

Looking to expand your operations or invest in commercial property? Bajaj Finserv Home Loans can help finance up to 90% of your property value with flexible repayment options. Start planning today for a financially secure future.

Popular calculators for your financial calculations