The interim government has decided to keep the corporate tax rate for non-listed firms unchanged at 27.5 percent for the fiscal year 2025–26, turning down long-standing appeals from entrepreneurs and trade bodies to lower the rate for companies operating entirely through banking channels.

Previously, non-listed companies received a 2.5 percentage point reduction—bringing the rate down to 25 percent—if all their transactions were routed through banks. This provision, aimed at encouraging formalisation of the economy, will no longer be available in the new fiscal year.

The change follows the government’s revised corporate tax structure for listed firms. Under the FY2025–26 budget, listed companies that have floated at least 10 percent of their shares through an initial public offering (IPO) or direct listing will be taxed at 22.5 percent. The rate may drop to 20 percent if all income is channelled through banks.

However, companies that are listed but have offloaded less than 10 percent of their shares—such as Berger Paints and Walton Hi-Tech Industries—will not qualify for the lower rate. Instead, they will face the flat 27.5 percent tax, which may be reduced to 25 percent if they transact entirely via the banking system, according to a finance ministry statement.

The revised framework has drawn mixed reactions. Some observers note that it may dampen incentives for formalisation among non-listed firms while maintaining tax privileges for fully compliant listed entities.