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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%.

Tax Rates

> 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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