Union Budget 2018– Rationalisation of provision of section 115BA relating to certain domestic companies
Section 115BA of the Act provides that the total income of a newly set up domestic company engaged in business of manufacture or production of any article or thing and research in relation thereto, or distribution of such article or thing manufactured or produced by it, shall, at its option, be taxed at the rate of 25 per cent. subject to conditions specified therein. This benefit is available from assessment year 2017-18.
However, there are certain incomes which are subject to a scheduler tax at a rate which is lower or higher than 25 per cent. Consequently tax payers have been subjected to unintended hardship or unwarranted relief. Accordingly it is proposed to amend section 115BA so as to clarify that the provisions of section 115BA is restricted to the income from the business of manufacturing, production, research or distribution referred to therein; and income which are at present taxed at a scheduler rate will continue to be so taxed.
The amendment will take effect retrospectively from the 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent years.
Extract of Clause 33 of Finance Bill 2018
Clause 33 of the Bill seeks to amend section 1 15BA of the Income-tax Act relating to tax on income of certain domestic companies.
The said section provides that subject to the fulfillment of conditions specified therein and the provisions of sections 111A and 112 of Chapter XII, from assessment year 2017-201 8, the total income of certain a newly set up domestic companies shall, at their option, be taxed at the rate of twenty-five per cent.
It is proposed to amend the said section so as to provide that the provisions of this section shall be subject to the other provisions of the said Chapter instead of only sections 111A and 112.
This amendment will take effect retrospectively from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.