Budget proposes surcharge levy on firms
Published: Feb 03, 2025
By TIOLCorplaws News Services
NEW DELHI, FEB 03, 2025: THE latest income tax bill outlines revised rates for companies for the fiscal year 2023-24, with specific provisions for both domestic and non-domestic companies.
For domestic companies with a total turnover or gross receipts not exceeding four hundred crore rupees in the previous year, the tax rate is set at 25%. Companies that opt for the section 115BA regime will continue to follow this rate. For all other domestic companies, the tax rate is 30%. An alternative option under section 115BAA allows eligible domestic companies to pay a reduced tax rate of 22%, with a 10% surcharge applied.
Non-domestic companies face a tax rate of 35% on their total income, excluding income subject to special rates.
Surcharge rates have also been updated. Domestic companies will face a 7% surcharge if their total income exceeds one crore rupees but does not exceed ten crore rupees. A 12% surcharge applies for companies exceeding ten crore rupees in income. Non-domestic companies will have a 2% surcharge for income between one crore rupees and ten crore rupees, while those with income over ten crore rupees will incur a 5% surcharge.
A new 4% "Health and Education Cess on income-tax" will also be levied for FY 2025-26, calculated on the total tax, including surcharge. Notably, no marginal relief is available for this cess.
Additionally, the surcharge will be levied at 12% in specific cases such as sections 92CE, 115QA, 115R, 115TA, and 115TD.
These tax updates aim to streamline corporate taxation, with the introduction of both reduced tax rates for qualifying companies and specific surcharge provisions to ensure equity.
