Income Tax Rates FY 2026-27 for Every Taxpayer: Individuals, Firms, LLPs, Companies & Co-operatives
Income tax rates for FY 2026-27: individuals, HUF, firms, LLPs, companies, co-operatives and foreign companies, with surcharge, cess and MAT explained.
A founder in Hitech City is deciding between a private limited company, an LLP and staying a sole proprietor. The first question a banker, an investor and the founder’s own CA will each ask is: what rate of tax will this entity pay? The answer differs widely, and since 1 April 2026 the rates are administered under the Income-tax Act, 2025, which renumbered many sections. The rates below are for tax year 2026-27.
Rates at a glance
| Person | Base rate | Surcharge | Effective rate (indicative) |
|---|---|---|---|
| Individual, HUF, AOP, BOI (new regime) | Slabs: nil to 30% | 10% / 15% / 25% by income | Up to about 31.2% at the top without surcharge |
| Partnership firm and LLP | 30% | 12% if income above ₹1 crore | 34.944% above ₹1 crore |
| Domestic company, concessional regime (old s.115BAA) | 22% | 10% flat | 25.168% |
| Domestic company, regular rate, prior-year turnover up to ₹400 crore | 25% | 7% above ₹1 crore; 12% above ₹10 crore | Up to 29.12% (before MAT) verify |
| Domestic company, regular rate, other | 30% | 7% / 12% | Up to 34.944% verify |
| New manufacturing company (old s.115BAB) | 15% | 10% | 17.16%; closed to new entrants unless the law was extended verify |
| Foreign company | 35% (royalty and technical fees 20%) | 2% / 5% by income | Check treaty relief verify |
| Co-operative society | 22% (old s.115BAD) or slab 10/20/30% | 10% for 22% | 25.168% under concessional option |
| Local authority | 30% | 12% above ₹1 crore | 34.944% above ₹1 crore |
Companies in detail
Concessional regime (22%). Domestic companies can opt for the 22% rate, subject to forgoing most deductions and incentives and not carrying forward certain losses and credits. The big attraction: Minimum Alternate Tax does not apply to a company that opts for it. The option, once exercised, generally cannot be reversed verify.
Regular regime (25% or 30%). The 25% rate applies where the company’s turnover in the earlier year was up to ₹400 crore; otherwise 30%. A company here is also exposed to MAT, which at 15% of book profit (plus surcharge and cess) can exceed normal tax in a year with heavy deductions verify. MAT paid can be carried forward as credit for a limited period.
Start-ups. A DPIIT-recognised start-up incorporated within the permitted window can claim a three-year tax holiday out of ten years under the old section 80-IAC, subject to an inter-ministerial certificate. Budget 2025 reportedly extended the incorporation window to 1 April 2030, so check eligibility on the date of incorporation verify.
Firms and LLPs
A partnership firm or LLP is taxed at 30% on its profit after allowable remuneration and interest to partners, plus 12% surcharge above ₹1 crore and 4% cess. The share of profit received by a partner is exempt in the partner’s hands. That is the main structural difference from a company, where dividends are taxed again in the shareholder’s hands at slab rates. An LLP is also exposed to the alternative minimum tax at 18.5% of adjusted total income verify. See Pvt Ltd vs LLP for the non-tax factors.
Capital gains and special rates
| Income | Rate | Note |
|---|---|---|
| Short-term gain on listed equity (STT paid) | 20% | Old s.111A verify |
| Long-term gain on listed equity (STT paid) | 12.5% above ₹1.25 lakh gain | Old s.112A verify |
| Other long-term gains | 12.5% without indexation | Land and building acquired before 23 July 2024 had a grandfathering choice verify |
| Dividend from a domestic company | Slab rate (individual) / company rate | TDS may apply |
| Lottery, online games | 30% | Rebate not available |
Which structure suits which founder?
- Services start-up planning to raise funds: a private limited company. The 22% regime gives a predictable headline rate, and investors expect it.
- Professional or consulting partnership with profits distributed: an LLP is often cheaper overall because profit share is not taxed twice, but a high-income partner already sits at the top slab.
- Small trader or freelancer: proprietorship with presumptive taxation (below), until turnover or risk justifies incorporation.
These are rules of thumb, not advice. The right answer turns on the exit plan, funding and the owners’ own tax position. Our company incorporation and company registration in Hyderabad pages explain the next steps.
Presumptive taxation and audit limits worth knowing
| Scheme | Who | Turnover limit | Deemed profit |
|---|---|---|---|
| Old s.44AD | Resident individual, HUF, firm (not LLP) | ₹2 crore; ₹3 crore if cash receipts are 5% or less | 6% for digital receipts, 8% otherwise |
| Old s.44ADA | Specified professionals | ₹50 lakh; ₹75 lakh if cash receipts are 5% or less | 50% |
| Old s.44AB (audit) | Business | ₹1 crore; ₹10 crore if cash receipts and payments are 5% or less | Tax audit mandatory above the limit |
Limits are shown as under the 1961 Act numbering; the 2025 Act renumbers them verify.
Why work with ComplianceKart
The tax rate is one number in a structuring decision that also involves company law, GST, funding and exit. ComplianceKart is a boutique practice bringing CAs, CSs and advocates under one roof, like a multi-speciality hospital where the specialists consult each other before treating you. We model the options on your numbers and then handle incorporation and compliance. We do not promise any tax saving.
Frequently asked questions
What is the income tax rate for a company in FY 2026-27?
22% under the concessional regime (effective about 25.17% with 10% surcharge and 4% cess), or 25% or 30% under the regular regime depending on turnover, plus MAT where applicable verify.
What is the tax rate for an LLP?
30% on profit, with 12% surcharge when income exceeds ₹1 crore and 4% cess, giving an effective rate of 34.944% above that level.
Is MAT applicable to every company?
No. A company that opts for the 22% regime is outside MAT. Companies on the regular regime may face MAT at 15% of book profit.
What is the tax rate on a co-operative society?
22% under the concessional option, or slab rates of 10%, 20% and 30%. A 15% rate was available for new manufacturing co-operatives under the old s.115BAE; check if it still applies.
Is the tax rate on a foreign company different?
Yes. The base rate is 35% for foreign companies, with lower rates for specified incomes such as royalty and technical fees and relief available under a tax treaty.
Did the Income-tax Act, 2025 change these rates?
The rates reportedly carried forward, but the sections were renumbered and drafting changed. Always cite the new provision in a return or reply.
Which entity pays less tax on your facts?
Tell us the business, expected profit and funding plans. We will compare the options.
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Disclaimer. This article is general information on Indian law as at 20 October 2026 and is not advice on any specific case. Items marked verify should be checked against the current official text before reliance. Contact: team@compliancekart.com · 9959536391 · compliancekart.com.
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