Demystifying Tax Audit in India-Part-3

Section 115BA of the Income Tax Act, 1961 provides for a concessional tax rate of 15% on the total income of new domestic companies engaged solely in the business of manufacturing or production of any article or thing. This provision is applicable to companies incorporated on or after October 1, 2019.

To be eligible for the concessional tax rate under Section 115BA, the following conditions must be satisfied:

1. The company should be incorporated on or after October 1, 2019.
2. The company should be engaged solely in the business of manufacturing or production of any article or thing.
3. The company should not avail any exemption or deduction under the Income Tax Act, except for the deduction provided under section 80JJAA (which relates to employment of new employees).

The concessional tax rate of 15% under Section 115BA is aimed at promoting domestic manufacturing and incentivizing the incorporation of new manufacturing companies in India. The scheme provides a simpler and more favorable tax regime to new companies engaged in manufacturing, thereby promoting investment and economic growth in the country.

Section 115BAA of the Income Tax Act, 1961 provides for a concessional tax rate of 22% on the total income of domestic companies. This provision is applicable to companies that do not claim any exemption or deduction under the Income Tax Act, except for the deduction provided under section 80JJAA (which relates to employment of new employees).

To be eligible for the concessional tax rate under Section 115BAA, the following conditions must be satisfied:

1. The company should be a domestic company.
2. The company should have exercised the option to be taxed under this section and should not have claimed any exemption or deduction under the Income Tax Act, except for the deduction provided under section 80JJAA.
3. The company should not have any accumulated loss or unabsorbed depreciation as on the date of exercise of the option.

The concessional tax rate of 22% under Section 115BAA is aimed at providing a simpler and more favorable tax regime to domestic companies, thereby promoting investment and economic growth in the country. The scheme provides a lower tax rate for companies that do not avail of any exemptions or deductions under the Income Tax Act, thereby reducing the compliance burden for such companies.

Section 115BAB of the Income Tax Act, 1961 provides for a concessional tax rate of 15% on the total income of new manufacturing companies that are incorporated on or after October 1, 2019, and start production on or before March 31, 2023.

To be eligible for the concessional tax rate under Section 115BAB, the following conditions must be satisfied:

1. The company should be incorporated on or after October 1, 2019.
2. The company should be engaged in the business of manufacturing or production of any article or thing.
3. The company should not have been formed by splitting up or reconstruction of a business already in existence.
4. The company should not have any unit in India that is engaged in business of development of computer software or providing IT or IT-enabled services.
5. The company should not be engaged in any business other than the business of manufacture or production of any article or thing.
6. The company should commence production on or before March 31, 2023.

The concessional tax rate of 15% under Section 115BAB is aimed at promoting domestic manufacturing and incentivizing the incorporation of new manufacturing companies in India. The scheme provides a simpler and more favorable tax regime to new companies engaged in manufacturing, thereby promoting investment and economic growth in the country.

Section 115BAC of the Income Tax Act, 1961 provides for a new, optional tax regime for individuals and Hindu Undivided Families (HUFs) to calculate their income tax liability. This new regime was introduced in the Finance Act, 2020, and is applicable from the assessment year 2021-22 onwards.

Under the new regime, taxpayers have the option to choose between the existing tax regime, with all its exemptions and deductions, or the new regime with lower tax rates but without most of the exemptions and deductions available under the existing regime.

The tax rates under Section 115BAC are as follows:

Income Tax Rate

Up to Rs. 2.5 lakh Nil

Rs. 2.5 lakh to Rs. 5 lakh 5%

Rs. 5 lakh to Rs. 7.5 lakh 10%

Rs. 7.5 lakh to Rs. 10 lakh 15%

Rs. 10 lakh to Rs. 12.5 lakh 20%

Rs. 12.5 lakh to Rs. 15 lakh 25%

Above Rs. 15 lakh 30%

It is important to note that if a taxpayer chooses to opt for the new tax regime under Section 115BAC, they will have to forego most of the exemptions and deductions available under the existing tax regime, including deductions under Section 80C, 80D, and 80TTA, among others.

The objective of introducing the new tax regime under Section 115BAC is to simplify the tax structure and reduce the compliance burden for taxpayers. The new regime is expected to benefit taxpayers who do not claim many exemptions and deductions under the existing regime, while providing them with a simpler and more efficient tax regime.

Section 115BAD of the Income Tax Act, 1961 provides for a concessional tax rate of 22% on the total income of domestic companies that are engaged in the business of manufacturing or production of any article or thing, and which are not availing of any exemption or incentive under the Income Tax Act.

The concessional tax rate of 22% under Section 115BAD was introduced in the Finance Act, 2019 and is applicable from the assessment year 2020-21 onwards. To be eligible for the concessional tax rate under Section 115BAD, the following conditions must be satisfied:

1. The company should be incorporated and registered in India.
2. The company should be engaged in the business of manufacturing or production of any article or thing.
3. The company should not avail of any exemption or incentive under the Income Tax Act, except for the exemption provided under Section 10AA.
4. The company should not be engaged in any business other than the business of manufacture or production of any article or thing.

It is important to note that if a company chooses to opt for the concessional tax rate under Section 115BAD, it will have to forego any exemption or incentive that it may have been availing of under the Income Tax Act. The objective of introducing the concessional tax rate under Section 115BAD is to promote domestic manufacturing and incentivize companies to invest in the manufacturing sector in India. The scheme provides a simpler and more favourable tax regime to domestic companies engaged in manufacturing, thereby promoting investment and economic growth in the country.

This article is for informational purposes only and is based on the author’s interpretation of the relevant provision. It should not be taken as professional advice.

For more details and personalised advise please contact us via https://taxamicus.in/contact-us/. Please reach us via call on +91-8480003660.