Key points of Section 115BAB of the Income Tax Act, 1961

 1. This section is applicable on domestic companies

2. This section is applicable from the AY 2020-21

3. Effective Tax rate under this section is 17.16% (Tax 15% plus, Surcharge 10% and Cess 4%)

4. The company should be incorporated and registered in India on or after 1^st October 2019

5. The company should commenced manufacturing or production of an article of thing on or before 31^st March 2023

6. The company should not be formed by virtue of splitting up, reconstruction of already business in existence

7. It should not use Plant & Machinery previously used for any purpose, however the company can use old plant and machinery, the value of which does not exceed 20% of the total value of the plant and machinery used by the company

8. It should not use Building previously used for hotel or convention centre

9. It should not engaged in any business other than the business of manufacturing or production of an article of thing

10. The total income of the company will be computed without giving following deductions-

• Tax Holiday for Units in Special Economic Zones (Section 10AA)
• Additional Depreciation u/s 32(iia)
• Investment Linked deduction u/s 32AD
• Benefits u/s 33AB or 33ABA
• Accelerated R&D allowance (Clause (ii), (iia), (iii) of Sub Section (1), Sub Section (2AA) or Sub Section (2AB) of Section 35)
• Allowances u/s 35AD, 35CCC or 35CCD
• Deductions under Chapter VIA other than the provisions of section 80JJAA, additional employment or section 80M, inter corporate dividends
• Without set off of any loss or unabsorbed deprecation attributable to any of the aforesaid deductions

11. Deprecation can be claimed

12. Company opting section 115BAB should exercise this option at the time of filing it first return and should file Form 10ID with the department online.

13. Once the option has been exercised for any previous year, it cannot be subsequently withdrawn for the same or any other previous year.

14. Provisions of MAT under section 115JB shall not be applied on companies opting for new regime.

15. The loss referred to in point no. 10 shall be deemed to have been given full effect to and no further deduction for such loss shall be allowed for any subsequent year.