{"id":579,"date":"2024-05-21T06:12:50","date_gmt":"2024-05-21T06:12:50","guid":{"rendered":"https:\/\/komplytek.com\/blogs\/?p=579"},"modified":"2024-06-10T09:42:59","modified_gmt":"2024-06-10T09:42:59","slug":"section-115baa-new-tax-rates-for-domestic-companies","status":"publish","type":"post","link":"https:\/\/komplytek.com\/blogs\/section-115baa-new-tax-rates-for-domestic-companies\/","title":{"rendered":"Section 115BAA: New Tax Rates for Domestic Companies"},"content":{"rendered":"<body><p>\u00a0<\/p>\n<p>The Government of India introduced Section 115BAA through the Taxation (Amendment) Ordinance 2019 on September 20, 2019. This ordinance amended the Income Tax Act, 1961, bringing significant changes such as a reduction in the corporate tax rate for domestic and manufacturing companies. Additionally, the MAT rate was lowered from 18.5% to 15%.<\/p>\n<p>\u00a0<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/komplytek.com\/blogs\/section-115baa-new-tax-rates-for-domestic-companies\/#Section_115BAA_%E2%80%93_Concessional_Tax_Rates_for_Domestic_Companies\" >Section 115BAA: \u2013 Concessional Tax Rates for Domestic Companies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/komplytek.com\/blogs\/section-115baa-new-tax-rates-for-domestic-companies\/#Eligibility_Criteria_for_Claiming_the_Concessional_Tax_Rate\" >Eligibility Criteria for Claiming the Concessional Tax Rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/komplytek.com\/blogs\/section-115baa-new-tax-rates-for-domestic-companies\/#Time_Limit_to_opt_for_Taxation_under_Section_115BAA\" >Time Limit to opt for Taxation under Section 115BAA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/komplytek.com\/blogs\/section-115baa-new-tax-rates-for-domestic-companies\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><\/li><\/ul><\/nav><\/div>\n<h2 id=\"mcetoc_1hucsm5su0\"><span class=\"ez-toc-section\" id=\"Section_115BAA_%E2%80%93_Concessional_Tax_Rates_for_Domestic_Companies\"><\/span>Section 115BAA: \u2013 Concessional Tax Rates for Domestic Companies<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><a href=\"https:\/\/komplytek.com\/direct-tax-services.php\" target=\"_blank\" rel=\"noopener\"><em><strong>Domestic companies<\/strong><\/em><\/a> were given the option to pay tax at a lower rate of 22% (plus applicable surcharge and cess) starting from the financial year 2019-20, provided they do not claim certain deductions or incentives. This effectively brings the tax rate to around 25.17%, including surcharge and cess.<\/p>\n<table width=\"616\">\n<tbody>\n<tr>\n<td width=\"162\"><strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Section<\/strong><\/td>\n<td width=\"168\"><strong>\u00a0\u00a0\u00a0 Applicable on<\/strong><\/td>\n<td colspan=\"2\" width=\"286\"><strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Tax Rate<\/strong><\/td>\n<\/tr>\n<tr>\n<td rowspan=\"4\" width=\"162\">\u00a0\n<p>115BAA<\/p><\/td>\n<td rowspan=\"4\" width=\"168\">\u00a0\n<p>Domestic Company<\/p>\n<p>\u00a0<\/p><\/td>\n<td width=\"206\">Tax Rate<\/td>\n<td width=\"80\">\u00a022%<\/td>\n<\/tr>\n<tr>\n<td width=\"206\">Surcharge (Compulsory)<\/td>\n<td width=\"80\">\u00a010%<\/td>\n<\/tr>\n<tr>\n<td width=\"206\">Cess<\/td>\n<td width=\"80\">\u00a04%<\/td>\n<\/tr>\n<tr>\n<td width=\"206\"><\/td>\n<td width=\"80\">25.168%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>\u00a0<\/p>\n<p>The new Section 115BAA has been added to the Income Tax Act, 1961, to provide <strong>domestic companies<\/strong> with the benefit of a reduced corporate tax rate. This section allows <a href=\"https:\/\/komplytek.com\/direct-tax-services.php\" target=\"_blank\" rel=\"noopener\"><strong>domestic companies<\/strong><\/a> to opt for a concessional tax rate resulting in an effective tax rate of 25.17% starting from the FY 2019-20 (AY 2020-21) onwards, provided they meet certain specified conditions. Companies that choose this option are not required to pay tax under the Minimum Alternate Tax (MAT) provisions.<\/p>\n<h2 id=\"mcetoc_1hucsme1u1\"><span class=\"ez-toc-section\" id=\"Eligibility_Criteria_for_Claiming_the_Concessional_Tax_Rate\"><\/span>Eligibility Criteria for Claiming the Concessional Tax Rate<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The following Benefits\/Deductions will not be available under section 115BAA<\/p>\n<p>\u00a0<\/p>\n<table>\n<tbody>\n<tr>\n<td width=\"141\"><strong>Section<\/strong><\/td>\n<td width=\"460\"><strong>Benefits\/Deductions not Allowed<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"141\">10AA<\/td>\n<td width=\"460\">Deductions for the units established in Special Economic Zone.<\/td>\n<\/tr>\n<tr>\n<td width=\"141\">32\/32AD<\/td>\n<td width=\"460\">Additional Depreciation and Investment Allowance on New Plant and Machinery.<\/td>\n<\/tr>\n<tr>\n<td width=\"141\">33AB<\/td>\n<td width=\"460\">Deduction for Tea\/Coffee\/Rubber Business<\/td>\n<\/tr>\n<tr>\n<td width=\"141\">33ABA<\/td>\n<td width=\"460\">Deduction for Petroleum and Natural Gas Business<\/td>\n<\/tr>\n<tr>\n<td width=\"141\">35<\/td>\n<td width=\"460\">Deductions for Scientific Research Expenditure<\/td>\n<\/tr>\n<tr>\n<td width=\"141\">35AD<\/td>\n<td width=\"460\">Deductions for Expenditure on Specified Business<\/td>\n<\/tr>\n<tr>\n<td width=\"141\">35CCC<\/td>\n<td width=\"460\">Deduction of Expenses Incurred on Agriculture Extension Project.<\/td>\n<\/tr>\n<tr>\n<td width=\"141\">35CCD<\/td>\n<td width=\"460\">Deduction of Expenses incurred by a Company on Skill Development Projects.<\/td>\n<\/tr>\n<tr>\n<td width=\"141\">Chapter VI-A<\/td>\n<td width=\"460\">Deductions which are allowed in respect of certain incomes (Except Section 80JJA: Employment of New Employee and 80M: Inter Corporate Dividend)<\/td>\n<\/tr>\n<tr>\n<td width=\"141\">Other<\/td>\n<td width=\"460\">A set off of any loss carried forward or depreciation from earlier years.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>\u00a0<\/p>\n<h2 id=\"mcetoc_1hucsmlk52\"><span class=\"ez-toc-section\" id=\"Time_Limit_to_opt_for_Taxation_under_Section_115BAA\"><\/span>Time Limit to opt for Taxation under Section 115BAA<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Companies must opt for taxation under Section 115BAA by the due date of filing income tax returns, typically the 30th of September of the assessment year.<\/p>\n<h2 id=\"mcetoc_1hucsmslb3\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><strong>How does a domestic company exercise the option under section 115BAA?<br>\n<\/strong>The exercise of Section 115BAA shall be completed by electronically submitting details in Form No. 10-IC to the principal officer, either through a digital signature or electronic verification code.<\/li>\n<li><strong>Can a Company Opt out of this section?<br>\nDomestic companies<\/strong> that are not immediately inclined to avail themselves of this reduced rate can choose to do so after the expiration of their tax holiday period or any mentioned exemptions\/incentives.<\/li>\n<li><strong>If a taxpayer chooses to exercise the option under Section 115BAA, can they still utilize MAT credits?<br>\n<\/strong><strong>Domestic companies<\/strong> choosing Section 115BAA won\u2019t be eligible to claim MAT credits for taxes paid under MAT during their tax holiday period.<\/li>\n<\/ul>\n<ul>\n<li><strong>What is the Tax Holiday Period?<br>\n<\/strong><strong><\/strong>A tax holiday refers to a duration wherein an individual or a company is permitted to pay either no tax or a reduced amount of tax compared to the standard rate.<\/li>\n<\/ul>\n<ul>\n<li><strong>Does Section 115BAA supersede all other specific sections of Chapter XII, except for Sections 115BA and 115BAB?<br>\n<\/strong><strong><\/strong>No, section 115BAA does not override the other sections. For Example, the incomes of specific nature covered under Chapter XII, such as STCG (Section 111A) at 15%, LTCG (Section 112) at 10% or 20%, Section 112A at 10%, dividends from foreign companies (Section 115BBDA) at 15%, etc., be subject to tax at rates mentioned in those sections.<strong><\/strong><\/li>\n<\/ul>\n<ul>\n<li><strong>Can a foreign company choose to avail itself of the provisions of Section 115BAA?<br>\n<\/strong><strong><\/strong>Foreign companies cannot opt for the tax rates under Section 115BAA<\/li>\n<\/ul>\n<\/body>","protected":false},"excerpt":{"rendered":"<p>\u00a0 The Government of India introduced Section 115BAA through the Taxation (Amendment) Ordinance 2019 on September 20, 2019. This ordinance [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":586,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[134],"tags":[],"class_list":["post-579","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax-service"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Section 115BAA: New Tax Rates for Domestic Companies - Komplytek Blogs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/komplytek.com\/blogs\/section-115baa-new-tax-rates-for-domestic-companies\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Section 115BAA: New Tax Rates for Domestic Companies - Komplytek Blogs\" \/>\n<meta property=\"og:description\" content=\"\u00a0 The Government of India introduced Section 115BAA through the Taxation (Amendment) Ordinance 2019 on September 20, 2019. 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