Pvt Ltd Company Tax Rates 2026: Corporate Tax, MAT, Surcharge & Cess Explained

Private Limited Companies in India can choose between three corporate tax structures:

• Normal regime – 25% or 30% + MAT applicable

• Section 115BAA – 22% concessional rate (no MAT)

• Section 115BAB – 15% concessional rate for new manufacturing companies (no MAT)

Your choice directly affects cash flow and retained earnings.

Key Takeaways

• Private Limited Companies in India can choose between three corporate tax structures: • Normal regime – 25% or 30% + MAT applicable • Section 115BAA – 22% concessional rate (no MAT) • Section 115BAB – 15% concessional rate for new manufacturing companies (no MAT) Your choice directly affects cash flow and retained earnings.
• Pvt Ltd Tax Rates FY 2026-27 – Which Regime Saves You More?
• Corporate Tax Rates (Domestic Pvt Ltd – FY 2026-27) Regime Base Rate Surcharge MAT Effective (incl. cess) Normal (<₹400cr turnover) 25% 7% / 12% Yes ~26%–29% Normal (>₹400cr turnover) 30% 7% / 12% Yes ~31%–34% 115BAA 22% 10% (fixed) No 25.17% 115BAB 15% 10% (fixed) No 17.16% Includes 4% Health & Education Cess.
• Health & Education Cess All companies pay 4% cess on: (Tax + Surcharge) Example (115BAA): 22% base 10% surcharge = 24.2% 4% cess on 24.2% = 25.17% effective Example (115BAB): 15% base 10% surcharge = 16.5% 4% cess = 17.16% effective MAT (Minimum Alternate Tax) Applicable only under the Normal Regime.
• Rate: 15% of Book Profits + surcharge + cess If tax calculated under normal provisions is lower than MAT, the company must pay MAT.

Pvt Ltd Tax Rates FY 2026-27 – Which Regime Saves You More?

The Vakilkaro Brief

• Default Regime: 25% (turnover ≤ ₹400 crore) or 30% (> ₹400 crore) + MAT 15%
• Section 115BAA: 22% flat + 10% surcharge + 4% cess (no MAT)
• Section 115BAB: 15% flat + 10% surcharge + 4% cess (no MAT, manufacturing only)

Example:

₹1 crore taxable profit

• Normal (30%) → approx ₹31.20 lakh effective

• 115BAA → approx ₹25.17 lakh effective

• 115BAB → approx ₹17.16 lakh effective

Understanding surcharge, cess, and MAT is critical before opting in.

Corporate Tax Rates (Domestic Pvt Ltd – FY 2026-27)

Regime Base Rate Surcharge MAT Effective (incl. cess)*

Normal (<₹400cr turnover) 25% 7% / 12% Yes ~26%–29%

Normal (>₹400cr turnover) 30% 7% / 12% Yes ~31%–34%

115BAA 22% 10% (fixed) No 25.17%

115BAB 15% 10% (fixed) No 17.16%

*Includes 4% Health & Education Cess.

Surcharge Slabs (Normal Regime Only)

For domestic companies under the normal regime:

Taxable Income Surcharge

Up to ₹1 crore Nil

₹1 crore – ₹10 crore 7%

Above ₹10 crore 12%

Important:

• 115BAA and 115BAB have fixed 10% surcharge irrespective of income.

• Marginal relief is available to avoid excessive tax spikes.

Health & Education Cess

All companies pay 4% cess on:

(Tax + Surcharge)

Example (115BAA):

22% base

• 10% surcharge = 24.2%
• 4% cess on 24.2%

= 25.17% effective

Example (115BAB):

15% base

• 10% surcharge = 16.5%
• 4% cess

= 17.16% effective

MAT (Minimum Alternate Tax)

Applicable only under the Normal Regime.

Rate: 15% of Book Profits + surcharge + cess

If tax calculated under normal provisions is lower than MAT, the company must pay MAT.

Key Points:

• MAT credit can be carried forward for 15 years

• MAT not applicable under 115BAA or 115BAB

• IFSC units may have concessional MAT rates (9%)

Regime Comparison

Factor Normal 115BAA 115BAB

Base Rate 25–30% 22% 15%

Surcharge 7–12% 10% 10%

MAT Yes No No

Deductions allowed Yes No major deductions No major deductions

Loss carry forward Allowed Restricted Restricted

Reversible? Yes Irrevocable once exercised Irrevocable

Eligibility Conditions

Section 115BAA (22%)

• Available to all domestic companies

• Must forgo most exemptions/deductions (e.g., 10AA, 32AD, 80IA etc.)

• No MAT

• Option exercised via Form 10-IC

• Irrevocable once chosen

Section 115BAB (15%)

• Must be a new domestic manufacturing company

• Incorporated on/after 1 October 2019

• Production commenced within prescribed timeline

• No splitting/reconstruction of existing business

• Use of new plant & machinery (as per limits)

• No major deductions

Option exercised via Form 10-ID.

Tax Illustration – ₹10 Crore Taxable Profit

Normal Regime (30% + 12% surcharge)

Base tax = ₹3.00 crore

Surcharge (12%) = ₹36 lakh

Subtotal = ₹3.36 crore

Cess (4%) = ₹13.44 lakh

Total tax ≈ ₹3.49 crore

Effective rate ≈ 34.94%

Section 115BAA (22%)

Base tax = ₹2.20 crore

Surcharge (10%) = ₹22 lakh

Subtotal = ₹2.42 crore

Cess (4%) = ₹9.68 lakh

Total tax ≈ ₹2.52 crore

Effective rate = 25.17%

Section 115BAB (15%)

Base tax = ₹1.50 crore

Surcharge (10%) = ₹15 lakh

Subtotal = ₹1.65 crore

Cess (4%) = ₹6.6 lakh

Total tax ≈ ₹1.72 crore

Effective rate = 17.16%

Savings vs Normal:

• 115BAA saves ~₹97 lakh

• 115BAB saves ~₹1.77 crore

Advance Tax Requirements

Companies must pay advance tax in four installments:

• 15% – June 15

• 45% – September 15

• 75% – December 15

• 100% – March 15

Interest under Sections 234B and 234C applies for shortfall.

ITR Filing

• ITR-6 filing deadline – 31 October (audited cases)

• Transfer Pricing cases – 30 November

• Maintain MAT credit records if applicable

Which Regime Should You Choose?

Choose 115BAA if:

• You do not rely heavily on tax incentives

• You want predictable lower rate

• You want to eliminate MAT exposure

Choose 115BAB if:

• You are a qualifying new manufacturing unit

• Capital-intensive operations

• Long-term manufacturing expansion

Choose Normal regime if:

• You have large carried forward losses

• You rely on sector-specific exemptions

• MAT credit is significant

Final Takeaway

For most new Private Limited Companies, Section 115BAA (22%) is the most practical and widely adopted regime due to simplicity and MAT removal.

However, regime selection must be made after:

• Reviewing carried-forward losses

• Calculating MAT impact

• Examining sector deductions

• Consulting a qualified tax professional

A wrong regime choice can lock you into a higher tax burden permanently.

Official External Resources

Use these primary/official sources to verify rules, forms, fees, timelines and regulatory updates before publication.

• Ministry of Corporate Affairs (MCA)