TAX RATES APPLICABLE FOR CERTAIN DOMESTIC COMPANIES (SECTION.115BAA) & FOR CERTAIN NEW MANUFACTURING COMPANIES (SECTION.115BAB)
key changes to corporate tax rates in the income tax act, 1961:
In Brief:
> Existing domestic companies have been provided an option to pay tax at a concessional @22%,
> New domestic companies set up on or after 01.10.2019 and commencing manufacturing before 31.03.2023 would have the option to pay tax @15%.
> However new tax rates will not allow a companies for specified deductions or incentives.
> MAT would not be applicable in either of these options
> Companies that do not opt for the new tax rates can enjoy the benefits of specified deductions & incentives and in that case MAT rate has also reduced from 18.5% to 15%
In Tabular form Section 115BA, 115BAA,115 BAB & Others
| PARTICULARS | SECTION115BA | SECTION 115BAA | SECTION 115BAB | OTHERS |
| Applicable from | A.Y. 2017-18 | A.Y. 2020-21 | A.Y. 2020-21 | – |
| Type of Company | Domestic company enga-ged in man-ufacturing/ production | All Domestic companies | Domestic company engaged in manu-facturing/ production | Any Domestic company |
| Start Date | Set up & registered on or after 01.03.2016 | No specific requi-rement | Set up & registered on or after 01.10.2019 and com-mence manu-facturing on or before 31.03.2023 | – |
| Allowability of specified deduction or loss | No | No | No | Yes |
| Basic Tax Rate | 25% | 22% | 15% | 25%/30% |
| Surcharge | 7%/12% | 10% | 10% | 7%/12% |
| Cess | 4% | 4% | 4% | 4% |
| Applicability of MAT | Yes (15%) | NA | NA | Yes (15%) |
| Specified domestic transaction provisions | NA | NA | Applicable | Applicable |
| Restriction for entities formed by restructuring /use of plant & machinery/use of building earlier use as hotel or convention center | NO | NO | Yes | – |
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