Foreign Company for AY 2026-27: Returns, Forms, Tax Rates and Key Deductions

What a foreign company means

The department guidance refers to section 2(23A) of the Income-tax Act, 1961. A foreign company means a company which is not a domestic company.

In practice, the first questions for a foreign company are usually the return form, the rate category, and whether any special reporting such as Form 3CE or MAT reporting applies.

Which return form usually applies

The foreign-company page for AY 2026-27 lists ITR-6 and ITR-7 as the main return routes depending on the nature of the filing obligation.

• ITR-6: for companies other than those claiming exemption under section 11
• ITR-7: for persons including companies required to file under sections 139(4A), 139(4B), 139(4C), or 139(4D)
• Section 139(4A): income from property held under trust wholly or partly for charitable or religious purposes
• Section 139(4B): Chief Executive Officer of a political party
• Section 139(4C): specified entities such as research associations, news agencies, and certain other bodies referred to in section 10
• Section 139(4D): university, college, or other institution referred to in section 35

Important forms foreign companies commonly deal with

The department page lists a smaller form set than the domestic-company page, but the listed forms are still important because they cover TDS reconciliation, audit, royalty or technical-fee reporting, and MAT.

• Form 26AS: TDS and TCS related tax-credit view
• AIS: broader annual information statement showing TDS, TCS, SFT information, taxes paid, demand or refund details, and other information
• Form 16A: certificate for TDS on income other than salary
• Form 3CA-3CD: tax-audit report and statement of particulars where section 44AB applies and the taxpayer is subject to audit under another law
• Form 3CE: accountant's report for non-resident or foreign-company cases covered by section 44DA in relation to specified royalty or fees for technical services
• Form 29B: accountant's report where section 115JB applies to the foreign company

Tax rates for foreign companies for AY 2026-27

The foreign-company help page shows a simple condition-based rate structure rather than multiple domestic-company options.

• 50 percent for specified royalty from Government or an Indian concern under the older agreement window referred to on the department page, or fees for technical services under the older approved agreement window referred to on that page
• 35 percent for any other income

Surcharge, marginal relief, and cess

The foreign-company guidance explains surcharge as an extra levy on the amount of income tax once taxable income crosses the relevant threshold.

The page shows surcharge at 2 percent where taxable income exceeds Rs. 1 crore up to Rs. 10 crore, and 5 percent where taxable income exceeds Rs. 10 crore. Health and education cess at 4 percent applies on income tax plus surcharge, if any.

The page also states that marginal relief is available so that surcharge does not exceed the additional income over the Rs. 1 crore and Rs. 10 crore thresholds in the manner described by the department.

• Surcharge: 2 percent above Rs. 1 crore up to Rs. 10 crore
• Surcharge: 5 percent above Rs. 10 crore
• Health and education cess: 4 percent
• Marginal relief applies around the Rs. 1 crore and Rs. 10 crore thresholds

MAT position for foreign companies

The foreign-company page states that a foreign company not falling under Explanation 4 of section 115JB is liable to pay MAT at 15 percent of book profit, plus applicable surcharge and cess, where the normal tax liability is lower than 15 percent of book profit.

This means foreign-company MAT questions cannot be answered only from the headline tax rate. The section 115JB position still needs to be checked wherever book-profit taxation is relevant.

Deduction sections highlighted on the foreign-company page

The foreign-company page lists a narrower deduction set than the domestic-company page. These are still useful because they show which Chapter VI-A or business-linked provisions remain relevant on the department's summary page.

• Section 80G: deduction for eligible donations, subject to category rules and the cash-payment restriction
• Section 80GGA: deduction for specified scientific-research or rural-development donations, subject to the conditions on the page
• Section 80GGC: deduction for eligible contribution to political party or electoral trust by non-cash mode
• Section 80IAB: deduction for development of Special Economic Zone, subject to conditions
• Section 80IE: deduction for certain undertakings in North-Eastern states, subject to conditions
• Section 80JJAA: deduction for additional employee cost where the section 44AB condition and other requirements are met
• Section 80LA: deduction for offshore banking units and IFSC income, subject to conditions

A practical checklist before filing a foreign-company return

Foreign-company filing issues often come from overlooking the exact rate category, missing section 44DA reporting, or assuming MAT does not matter. A careful pre-filing review usually avoids those mistakes.

• Confirm whether ITR-6 or ITR-7 applies before preparing the return
• Check whether the income falls under the special 50 percent category or under the general 35 percent category shown by the department page
• Review AIS, Form 26AS, and Form 16A before final computation
• Check whether section 44AB audit or section 44DA reporting triggers Form 3CA-3CD or Form 3CE
• Check whether section 115JB and Form 29B need to be considered
• Verify any Chapter VI-A deduction claim against the exact conditions of the relevant section