ASSESSMENT OF COMPANIES - SEC 115BAA AND 115BAB

 ASSESSMENT OF COMPANIES

SEC 115BAA AND 115BAB

Special Income-tax rate for certain domestic companies) (Section 115BAA

A domestic company, whether new or existing, private company or public ltd. or listed or unlisted, may opt to pay income-tax at the rate of 22% on his total income, provided he satisfies the following conditions:

(a) the total income of the company has been computed before deducting the following deductions:- additional depreciation under section 32(1), deduction under section 10AA, section 32AD, 33AB, 33ABA, 35(1), Deductions under 35 AD, 35 CCC and 35 CCD;

(b) the company has not taken deductions under sections 80C to 80U (except sections 80G, 80GGA, 80GGB, 80JJAA and 80LA);

(c) brought forward losses and depreciation brought forward under sections 72A and 73A are not set off. This option can be exercised by the company by filling Form 10IC. If the taxpayer company has taken this option for the assessment year 2020-21 or any subsequent assessment year, then the company cannot withdraw this option for the same or any other assessment year.

Surcharge – Surcharge will be levied at the rate of 10% on income tax irrespective of the income. Minimum alternative tax - In case of option being taken under this section, the minimum provisions will also not be applicable. Alternative

Provisions of Tax (MAT) will not be applicable. That is, MAT will not be applicable and special income-tax rates for new manufacturing domestic companies [Section 115 BAB]

A domestic company which is incorporated and registered on or after the 1st day of October, 2019 and which begins to produce or manufacture any article or thing on or before the 31st day of March, 2023, may, if it so desires, bring its total Can opt to pay income tax at the rate of 15% on income, provided the domestic company satisfies the following conditions: :

(1) The company is mainly engaged in the work of manufacturing or production of any article or goods and research or distribution of the same. The business of production or construction of any article or thing shall not include the following business :(a) Mining;

(b) developing computer software in any form or by any means,

(c) the conversion of any rough marble stone or the like into small slabs,

(d) filling the gas in the cylinder,

(e) the printing of books or the production of cinematographic films,

(v) any other business notified by the Central Government.

(2) The company does not use more than 20% old machines and plants, but imported old machines and plants (which were not used in India earlier) will be considered as new machines and plants.

(3) The company is not using any old building which was earlier used as a hotel or convention center under section 80ID.

(4) The company has not taken advantage of sections 10AA, 32(1), 32AD, 33AB< 33ABA, 35(1), 35AD, 35CCC and 35CCD. That is, the company has not provided tax exemption or deduction in these sections. (5) The company has not taken deductions under sections 80C to 80U (except sections 80G, 80GGA, 80GGB and 80JJAA).

(6) The company has not set off any brought forward losses or depreciation under sections 72A and 73A.

Tax rates under section 115BAB

(Tax rate u/s 115BAB)

tax rates

(Tax rates)

               Income arising from manufacture or production of article or thing 15%

Income from construction activities (if no specific rate is proposed) 22%

Short term capital gain on depreciable assets 15%

Short term capital gain on non-depreciable assets 22%

Additional income added by the Assessing Officer (due to close relationship with another person of the company) 30%

Form 10ID has to be filed before the due date of section 139(1) to exercise option under this section. This option has to be taken by the company in the first assessment year. If the company does not exercise the option of section 115BB in its first assessment year, the company shall be ineligible to exercise the option in the subsequent assessment year or years. Once this option is taken, it cannot be withdrawn. choose

Surcharge – Surcharge will be levied at the rate of 10% on income tax. No matter what the amount of income.

Minimum alternate tax - The provisions of minimum alternate tax (MAT) and tax credit (MAT credit) will not be applicable under this section. That is, no Minimum Alternate Tax will have to be paid by the company.