ITR For Companies Thresholds, Exemptions, and Applicability in India

A newly incorporated Pvt Ltd company asked us: 'We had zero revenue in our first year - do we still need to file ITR?' The answer is an unqualified yes. Under Section 139(1) of the Income Tax Act, every company must file its income tax return irrespective of income, loss, or turnover. Filing in loss years preserves carry-forward benefits, maintains ROC compliance, satisfies investor due diligence, and prevents director disqualification.

This guide covers everything a company in India needs to know about ITR filing: which form, which tax rate, which regime (115BAA vs 115BAB vs normal), when to file, which audit applies, what changed in 2026, and how to avoid the most common compliance mistakes.

What Is Company ITR and Why Is It Non-Negotiable?

Company ITR is the annual income tax return filed by a company registered under the Companies Act, 2013 (or earlier Acts) using Form ITR-6. It declares the company's total income, tax computation, tax paid, and claims for exemptions or deductions. Unlike individuals (where filing is mandatory only above the basic exemption limit), companies have no exemption threshold - every registered company must file, every year.

The ITR is not just a tax form - it is the cornerstone of corporate compliance. Banks require it for loan applications (minimum 2-3 years of filed ITRs). Investors require it for due diligence. The ROC cross-references it with statutory audit reports. The Income Tax Department's AIS now auto-matches company transactions with filed returns. For companies using ITR for companies (know more) filing support, timely and accurate filing is the single most important annual compliance obligation.

Key Terms You Should Know

• ITR-6: The prescribed form for companies (other than those claiming exemption under Section 11). Every Pvt Ltd, public company, and foreign company with Indian income files ITR-6.
• ITR-7: For companies claiming exemption under Section 11 - charitable trusts, religious institutions, political parties, research associations, and news agencies. If your company claims Section 11 exemption, use ITR-7 instead of ITR-6.
• Section 115BAA (22% Regime): Optional concessional rate of 22% (effective 25.17% with 10% surcharge + 4% cess). Available to ANY domestic company that forgoes specified exemptions/deductions. Once opted, irrevocable. MAT does not apply.
• Section 115BAB (15% Manufacturing Regime): Concessional rate of 15% (effective 17.16%) for new domestic manufacturing companies incorporated on or after 1 October 2019 that commenced production by 31 March 2024. MAT does not apply. Strictest conditions.
• Section 115BA (25% Regime): Available to domestic companies with turnover/gross receipts ≤ Rs 400 crore in the preceding FY. Base rate 25%. MAT applies. Companies can also claim exemptions/deductions under this regime.
• MAT (Minimum Alternate Tax - Section 115JB): Ensures companies with significant book profits but low taxable income (due to exemptions) pay at least 14% of book profit (reduced from 15% by Budget 2026). Does not apply to 115BAA/115BAB companies. From 1 April 2026, no new MAT credit accumulation; existing credit can be fully set off.
• Tax Audit (Section 44AB): Mandatory for companies if turnover exceeds Rs 1 crore (Rs 10 crore if cash transactions < 5%). All companies requiring audit must file ITR by 31 October. The audit report (Form 3CA + Form 3CD) must be filed before the ITR.

Which Companies Must File ITR in India?

• Every private limited company (Pvt Ltd) - regardless of turnover, profit, or loss
• Every public limited company - listed or unlisted
• Every One Person Company (OPC) - classified as a private company for tax purposes
• Every Section 8 company (not-for-profit) - uses ITR-6 unless claiming Section 11 exemption (then ITR-7)
• Every foreign company earning income in India - branch office, project office, or liaison office with taxable income
• Every dormant/inactive company - must file even with zero revenue and zero transactions
• Every company under strike-off proceedings - until the ROC actually removes the name from the register. For businesses managing private limited company compliance (know more), ITR filing continues until formal strike-off

There is no 'nil return' exemption for companies. Unlike individuals, companies cannot skip filing because income is below a threshold. The threshold is zero - if you are a registered company, you file.

Legal Framework: Tax Rates, Regimes, and Forms

Critical insight: The effective rate gap between 115BAB (17.16%) and the normal regime for large companies (34.94%) is enormous - a difference of Rs 17.78 lakh per Rs 1 crore of income. For eligible manufacturing companies, 115BAB is nearly always optimal. For non-manufacturing domestic companies, 115BAA (25.17%) provides the best effective rate if exemptions/deductions are not significant enough to offset the rate difference.

Step-by-Step: Choosing the Right Tax Regime for Your Company

1. Step 1: Determine your company type. Domestic or foreign? If foreign, the normal regime applies - Sections 115BAA and 115BAB are available only to domestic companies. Foreign companies pay 40% base rate.
2. Step 2: Check 115BAB eligibility (manufacturing). Is your company incorporated on or after 1 October 2019? Does it engage in manufacturing? Did it commence production by 31 March 2024? Uses only new machinery (with ≤20% used)? If ALL conditions met, 115BAB at 17.16% is the lowest available rate. File Form 10-ID before the ITR due date for the first eligible year. Once opted, irrevocable.
3. Step 3: Evaluate 115BAA (22% regime). If not eligible for 115BAB, compare: total tax under normal regime (with all exemptions and deductions) vs 25.17% under 115BAA (without exemptions). If your company does not have significant Section 80-IA, 80-IAB, 80-IAC, 10AA, or additional depreciation claims, 115BAA is almost always lower. File Form 10-IC. Once opted, irrevocable. For income tax return filing (know more), this regime comparison should be done BEFORE the filing deadline.
4. Step 4: Consider the normal regime (25% or 30%). Companies with significant exemptions (SEZ units claiming 10AA, companies claiming 80-IA for infrastructure) may find the normal regime more beneficial - even at a higher base rate - because the exemptions reduce taxable income substantially. MAT at 14% applies as a floor. Compare: (income minus exemptions) × normal rate vs income × 25.17% under 115BAA.
5. Step 5: Model the MAT impact. Under the normal regime, if your company has high book profits but low taxable income (due to exemptions), MAT at 14% of book profit applies. From FY 2026-27, no new MAT credit can be accumulated - MAT becomes the final tax. If MAT liability is close to or exceeds the 115BAA effective rate (25.17%), migrating to 115BAA eliminates MAT entirely while providing rate certainty.

Documents Required for Company ITR Filing

• Audited financial statements (Balance Sheet, P&L, Cash Flow Statement, Notes) - mandatory for all companies
• Tax audit report (Form 3CA + Form 3CD) - if Section 44AB audit applies (turnover > Rs 1 crore / Rs 10 crore)
• Board resolution for regime selection - if opting for 115BAA (Form 10-IC) or 115BAB (Form 10-ID)
• Form 26AS and AIS - for TDS credit verification and transaction reconciliation
• MAT computation workpapers - if MAT applies (book profit calculation per Section 115JB)
• Transfer pricing documentation - if international transactions or specified domestic transactions exceed Rs 1 crore
• Advance tax challans - proof of quarterly payments by 15 June, 15 September, 15 December, 15 March
• ROC annual return (Form AOC-4, MGT-7) - for cross-verification of financial data
• Capital gains workpapers - for any asset sales during the year (property, shares, investments)
• TDS returns filed (Form 26Q, 24Q) - for reconciliation with ITR TDS schedules
• ESOP/ESOS records - if applicable, for perquisite and share capital reporting
• Digital Signature Certificate (DSC) - mandatory for electronic filing of ITR-6

Complete Corporate Tax Rate Table: All Regimes Compared

Budget 2026 change: MAT rate reduced from 15% to 14% of book profit. Additionally, from 1 April 2026, no new MAT credit can be accumulated - MAT becomes the final tax. Existing MAT credit is fully allowed for set-off. This makes the regime comparison more critical: companies staying on the normal regime must evaluate whether the MAT floor at 14% justifies remaining in a regime with higher headline rates but deduction benefits.

Common Mistakes Companies Make in ITR Filing

Mistake 1: Not filing ITR for loss-making or dormant companies. Every company must file every year. A zero-revenue dormant company that does not file faces Section 234F late fee (Rs 5,000), Section 234A interest on any notional tax, and ROC complications (the ROC may initiate strike-off proceedings if annual returns and financial statements are also not filed).

Mistake 2: Opting for 115BAA without comparing with the normal regime. The 115BAA option is irrevocable. If your company has significant carry-forward losses, unabsorbed depreciation under Section 32(1)(ii), or active SEZ/infrastructure exemptions, the normal regime may result in lower tax. The comparison must be done on a multi-year basis, not just the current year. Once you file Form 10-IC, there is no going back.

Mistake 3: Missing the tax audit deadline. The tax audit report (Form 3CA/3CB + Form 3CD) must be filed BEFORE the ITR. The audit deadline is 30 September 2026 (FY 2025-26). If the audit is delayed, the ITR cannot be filed - triggering Section 271B penalty (0.5% of turnover or Rs 1.5 lakh) plus Section 234F late fee. For companies using tax audit (know more) services, start the audit process by July to ensure timely completion.

Mistake 4: Not reconciling ITR with ROC financials. The financial statements filed with the ROC (Form AOC-4) and the income/expense figures in ITR-6 must be consistent. The Income Tax Department cross-references these. A mismatch - even due to rounding or classification differences - triggers scrutiny notices. For companies maintaining statutory audit (know more) and tax audit simultaneously, ensure both auditors work from the same finalised financial statements.

Mistake 5: Ignoring the MAT computation when on the normal regime. Companies on the normal regime often compute tax only under the regular provisions and forget the MAT check. If MAT liability (14% of book profit) exceeds the normal tax liability, the company must pay MAT. Failure to compute and pay MAT leads to demand notices and interest under Section 234B/234C.

Penalties for Late Filing and Non-Compliance

• Section 234F - Late filing fee: Rs 5,000 if ITR filed after the due date (Rs 1,000 if income < Rs 5 lakh). Applies even for loss-making companies.
• Section 234A - Interest on late filing: 1% per month on outstanding tax from the due date until filing. For companies with significant advance tax shortfalls, this compounds quickly.
• Section 234B - Advance tax default: 1% per month if advance tax paid is less than 90% of the assessed tax. Calculated from April of the assessment year.
• Section 271B - Tax audit penalty: 0.5% of turnover or Rs 1,50,000 (whichever is lower) for failure to get accounts audited under Section 44AB.
• Section 276CC - Prosecution: Wilful non-filing - 3 months to 2 years imprisonment (below Rs 25 lakh tax); 6 months to 7 years (above Rs 25 lakh tax).
• Companies Act Section 137 - ROC penalty: Rs 1,000 per day of delay for not filing financial statements with ROC. Plus Rs 100 per day for each director in default.
• Director disqualification - Section 164(2): Directors of companies that have not filed annual returns for 3 consecutive years face DIN deactivation - cannot serve as directors in ANY company.

How Company ITR Connects with Tax Audit, ROC, and MAT

Company compliance is a chain: statutory audit (know more) produces the audited financial statements → tax audit (know more) verifies tax-specific items → ITR-6 is prepared and filed → ROC returns (Form AOC-4, MGT-7) are filed using the same audited financials. Each step depends on the previous one. A delay in statutory audit delays the tax audit, which delays the ITR, which delays the ROC filing - triggering penalties at every level.

MAT computation is embedded in the ITR-6 form itself - Schedule MAT requires the company to compute book profit, apply the 14% rate, and compare with normal tax liability. If MAT is higher, the difference (MAT credit) can be carried forward for set-off in subsequent years - but only for companies on the normal regime. Companies under 115BAA/115BAB do not compute MAT at all. From FY 2026-27, no new MAT credit accumulation means the carried-forward credit becomes a depleting asset.

The advance tax calendar is critical for companies: 15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March. Shortfall in any quarter triggers Section 234C interest at 1% per month on the shortfall amount. For companies with seasonal income or large one-time transactions (property sales, investment gains), advance tax estimation must be updated quarterly.

2026 Changes That Affect Company ITR

Key Takeaways

Every company registered in India must file ITR-6 annually regardless of turnover, profit, or loss. There is no exemption threshold for companies. Dormant, loss-making, and even companies under strike-off proceedings must file until formally removed from the ROC register.

The optimal tax regime for most non-manufacturing domestic companies is Section 115BAA at 25.17% effective rate - provided the company does not have significant exemption claims that would reduce the normal regime liability below 25.17%. The choice is irrevocable once Form 10-IC is filed. For eligible manufacturing companies, Section 115BAB at 17.16% is nearly always optimal.

Budget 2026 reduces MAT to 14% and eliminates new MAT credit accumulation from 1 April 2026. Companies on the normal regime must evaluate whether remaining on that regime - where MAT becomes a final tax - is still beneficial compared to migrating to 115BAA where MAT does not apply at all.

Company ITR filing is the anchor of a compliance chain that includes statutory audit, tax audit, ROC annual returns, and advance tax payments. A delay at any point cascades into penalties under both the Income Tax Act and the Companies Act, including director disqualification after 3 consecutive years of non-filing.

The Income Tax Act, 2025 (effective 1 April 2026) restructures company tax provisions with new section numbers. ITR-6 forms for FY 2026-27 will reference the new Act. Companies should ensure their CA and filing software are updated before the first filing under the new Act.

Need Help with ITR for Companies?

Company ITR filing involves statutory audit coordination, tax regime selection, MAT computation, advance tax planning, ROC synchronisation, and compliance with filing deadlines that carry both financial penalties and director disqualification risk.

Explore our ITR for companies services (know more) for end-to-end corporate compliance - from regime comparison and tax audit coordination to ITR-6 filing and post-filing notice management.

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