Changes in Tax Rates of Domestic Companies for the Assessment Year (A.Y 2020-21) / Financial Year (F.Y) 2019-20 vide Sections 115BAA & Section 115BAB -Inserted vide Finance Act, 2019

New Sections 115BAA & section 115BAB which got introduced by Finance Act, 2019 has eliminated the concept of MAT under section 115JB for the Domestic Companies while removing some deductions which are detailed below:-

S.No Particulars 115BAB (Tax @15%) 115BAA (Tax @22%)
1 Applicability Domestic Manufacturing Company Any Domestic Company
2 Rate of Tax 15% 22%
3 Surcharge (Mandatory) 10% 10%
4 Effective Rate of Tax 17.16% (15%+10%+4%) 25.168% (22%+10%+4%)
5 MAT Rate N.A N.A
6 Rate on LTCG u/s.112, 112A & STCG u/s.111A Special Rates which are applicable for LTCG/STCG+SC+HEC Special Rates which are applicable for LTCG/STCG+SC+HEC
7 Rate on STCG other than 111A 22%+10%+4% 22%+10%+4%
8 Tax Rate on Income other than from Manufacturing 22%+10%+4% 22%+10%+4%
9 Conditions a) The company should be set-up and registered on or after 01-10-2019.

b) It should commence manufacturing on or before 31-03- 2023.

c) It does not use any Machinery or plant previously used for any purpose (Note-2)

No Such Conditions
10 Common Conditions No deduction u/s 10AA, 32(1) (iia), 32AD, 33AB,  33ABA, 35(1) (ii)/ (iia)/ (iii), 35(2AA), 35(2AB),  35AD, 35CCC, 35CCD, 80-IA to 80RRB. No set off of losses from earlier A.Y. No Additional  Depreciation. Brought forward MAT credit cannot be set off
11 Subsequent Withdrawal of Options Cannot be Withdrawn Cannot be Withdrawn

Note:-

  • Business of Manufacture or Production of any article or thing does not include business of-

i. Development of Computer Software in any form or in any media.

ii. Mining

iii. Conversion of marble blocks or similar items into slabs

iv. Bottling of gas into cylinder

v. Printing of books or production of Cinematographic films

vi. Any other business as may be notified by central govt in this behalf

For the above cases tax rate of 15% cannot be opted, however they can opt the tax rate of 22%

  • Following Second hand machinery were Eligible: –

I. Imported Machinery-

a. Such machinery or plant is imported into India from any country outside India

b. It should not be used in India earlier.

II. Any Other P&M should not exceed 20% of total value of the machinery or plant used by the company.

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