Shift From 115BAB to 115BAA of Income tax act

[anand vaidyanathan]

Dear Learned members,

1. A Pvt Ltd company opted for 115BAB lower taxation (15% TAX+ S.C + Cess) having accumulated loss. Incorporated on JAN-2021 they have duly filed 10-ID and commenced manufacturing before 31/03/2023.

2. Now due to circumstances they will have to do trading also thereby 115BAB advantage shall be not there in future and they are ready to give up lower tax rate

Now the query is

1. Whether they can opt/ shift for 115BAA (22% TAX+ S.C + Cess) from present 115BAB if they are doing trading in the same company? Is it valid? Are they eligible for 115BAA tax rate when they opt for the same it since it is mentioned that 115BAB is irrevocable.

2. What will be the procedure for opting 115BAA other than filing form 10-IC?

3. Whether the loss accumulated during 115BAB period (normal business loss) shall be carried forward in 115BAA?

5. Whether is it enough to file form 10-IC before 139(1) due date or should we file well before.

Any other relevant compliances wrt this

Kindly request your advice in the above points and thankyou in advance for your clarification.

AI Summary

115BAB to 115BAA transition: irrevocable option, trading activity, and fresh compliance conditions under the concessional tax regimes.
A company that has exercised the 115BAB concessional tax regime through Form 10-ID cannot treat that option as freely reversible, because the election is stated to be irrevocable. If the company later begins trading or otherwise breaches the conditions attached to the 115BAB regime, the concessional rate ceases from the year of violation and the company becomes taxable at the normal applicable rate. The commentary suggests that a separate prospective election under 115BAA may still be arguable if all conditions for that regime are satisfied.