Update, 28 September 2026: CBDT has extended two AY 2026-27 dates for taxpayers whose accounts are audited: the tax audit report to 21 October 2026 and the income tax return to 21 November 2026 (announced 28 September 2026). Other dates are unchanged unless separately notified.
Why a company's tax rate isn't just one number
Unlike an individual choosing between two regimes, a domestic company effectively chooses between several rate structures, each with its own trade-offs. The standard regime (25% or 30%, depending on turnover) allows the usual range of deductions and is subject to Minimum Alternate Tax on book profits. Section 115BAA offers a flat 22% to any domestic company, with no MAT, but requires giving up most specific exemptions and incentive deductions — and once elected, the choice cannot be reversed in later years. Section 115BAB offers an even lower 15% specifically for new manufacturing companies meeting conditions around incorporation date and the nature of their business.
The right choice depends on how much the company actually uses the deductions it would have to give up under 115BAA, and whether it qualifies for 115BAB in the first place. A company already using few specific deductions, or one that would pay MAT anyway under the standard regime, often benefits from 115BAA regardless of its exact profit level, because the flat 10% surcharge under that section can be more favourable than the income-tiered 7%/12% surcharge under the standard regime once income is substantial.
Comparing the main company tax regimes
| Feature | Standard regime | Section 115BAA | Section 115BAB |
|---|---|---|---|
| Base rate | 25% (turnover ≤ ₹400cr in FY 2023-24) or 30% | 22% | 15% |
| Eligibility | Any domestic company | Any domestic company | New manufacturing companies meeting specified conditions |
| Exemptions/deductions | Generally available | Most specific exemptions and incentive deductions given up | Most specific exemptions and incentive deductions given up |
| MAT | Applies, at 15% of book profit | Not applicable | Not applicable |
| Surcharge | 7% or 12%, based on income level | Flat 10%, regardless of income | Flat 10%, regardless of income |
| Reversible? | N/A | No — irrevocable once elected | No — irrevocable once elected |
Documents required
- Audited financial statements for the year, along with the statutory audit report.
- The tax audit report (Form 3CA/3CB and 3CD), since every company is subject to tax audit once it's incorporated, regardless of turnover.
- Details of depreciation as per the Income Tax Act, separate from book depreciation.
- TDS returns and Form 26AS, for reconciling tax already deducted on the company's income.
- Details of any brought-forward losses or unabsorbed depreciation from earlier years.
- Form 10-IC (for a company electing Section 115BAA for the first time) or Form 10-ID (for Section 115BAB).
- Related-party transaction details, where transfer pricing provisions apply.
The company tax filing process, step by step
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Regime evaluation
Tax liability is computed under the standard regime and under Section 115BAA (and 115BAB, if the company qualifies) to identify which is actually more favourable given the company's specific deduction profile.
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Coordination with the statutory and tax audit
The return is prepared from the audited financial statements and the tax audit report, so all three are consistent with each other.
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MAT computation, where applicable
For companies under the standard regime, Minimum Alternate Tax on book profit is computed and compared against the regular tax liability — whichever is higher applies, subject to MAT credit carried forward for future years.
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Filing the regime election form, if applicable
A company electing Section 115BAA or 115BAB for the first time files the corresponding form before or along with the return — this is a one-time filing that then applies for all future years.
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Filing ITR-6
The return is filed electronically, verified digitally (a company return requires a digital signature, not Aadhaar OTP), by the due date.
Due dates and penalties
| Situation | Date / consequence |
|---|---|
| Company tax return (ITR-6) | Due 21 November 2026 (extended from 31 October 2026) — every company is subject to tax audit, so this is the applicable date regardless of turnover |
| Late filing fee (Section 234F) | Up to ₹5,000 |
| Late payment of tax | Interest under Sections 234B and 234C, for shortfall in advance tax paid during the year |
Practical notes from our engagements
- Section 115BAA elected without modelling the alternative first. Because the election is irrevocable, moving to 115BAA without first comparing several years of projected profit under both regimes can lock in a choice that looks worse once the company's deduction profile changes.
- MAT credit not tracked and carried forward correctly. A company under the standard regime that pays MAT in a low-profit year is entitled to carry the credit forward against future years' regular tax — this is easy to lose track of if not recorded carefully year on year.
- 115BAB eligibility assumed without checking every condition. The manufacturing rate carries specific conditions around incorporation date and the nature of the business — assuming eligibility without confirming every condition is a common and costly mistake given how much lower the rate is.
- Book depreciation used instead of tax depreciation. The Income Tax Act's depreciation rates differ from what the company uses in its own books under accounting standards — the return uses the tax figure, not the book figure.
How we handle company tax filing
We model the company's tax position under each available regime before recommending one, given how consequential and irreversible the 115BAA/115BAB election is. The return itself is prepared directly from the audited financial statements and the tax audit report, so all three filings are internally consistent rather than reconciled after the fact.
Related services
Frequently asked questions
What tax rate does our company pay?
It depends on which regime the company is under: 25% or 30% under the standard regime (based on turnover), 22% under Section 115BAA, or 15% under Section 115BAB for eligible new manufacturers — plus surcharge and cess in each case.
Can we switch to Section 115BAA if we're currently under the standard regime?
Yes, a company can elect Section 115BAA in any year, but the election is irrevocable once made — it applies to all subsequent years.
Does every company need a statutory audit before filing its tax return?
Yes — every company is subject to statutory audit under the Companies Act and tax audit under Section 44AB, regardless of turnover, and the tax return is prepared from those audited figures.
What is MAT, and does it apply if we're under Section 115BAA?
Minimum Alternate Tax applies to companies under the standard regime, computed at 15% of book profit and compared against regular tax liability. Companies electing 115BAA or 115BAB are exempt from MAT.
Can a trading or services company use the 15% rate under Section 115BAB?
No — Section 115BAB is specifically for new manufacturing companies meeting conditions around incorporation date and business activity. A trading or services business isn't eligible.
What happens to MAT credit if we later move to Section 115BAA?
MAT credit accumulated while under the standard regime generally cannot be carried forward and set off once a company elects 115BAA — this is a factor worth weighing before making the election.
Is there a separate form to elect Section 115BAA?
Yes — Form 10-IC for Section 115BAA, or Form 10-ID for Section 115BAB, filed before or along with the return in the year the election is first made.
What's the due date for our company's tax return?
21 November 2026 (extended from 31 October 2026) for AY 2026-27 — every company falls into the audit-case category since statutory and tax audit apply to companies regardless of turnover.
Does the surcharge work the same way under all regimes?
No — under the standard regime, surcharge is tiered at 7% or 12% depending on income level. Under Sections 115BAA and 115BAB, it's a flat 10% regardless of how much income the company has.