Tax on income of certain domestic companies - section (New) 200 / (Old) 115BAA

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....tic Companies only • As per section 2(42) define the "domestic company" means -  • (i) an Indian company; or • (ii) any other company which has made the prescribed arrangements within India for the declaration and payment of the dividends (including dividends on preference shares) payable out of its income liable to tax under this Act; Concessional Tax Rate • Income tax rate = 22% • Surcharge = 10% of the Income tax • Health & Education Cess = 4% of income-tax and surcharge • Effective tax rate = 25.168%. Computation of Total Income in the following manner Clause (a) - No Deductions Allowed • (i) No Certain D....

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.... in Special Economic Zones. Clause (b) - Restriction on Carry Forward Losses The company cannot set off losses or depreciation carried forward from earlier years if they arose due to deductions mentioned in clause (a) Clause (c) - Restriction on Deemed Unabsorbed Depreciation No carried-forward loss or unabsorbed depreciation under section 116 shall be allowed to be set off if it relates to any deductions mentioned in clause (a). Sub-Section (2) - Consequences of failing to satisfy conditions If a company does not satisfy the conditions prescribed under Section 200(1) in any tax year, then: The option for concessional tax rate becomes invalid, and The normal pr....

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....ed under section 263(1) for furnishing the return of income and such option once exercised, shall apply to subsequent tax years. Sub - Section (6) - Irrevocability of the Option • Once the option under this section has been exercised for any tax year, it shall not be subsequently withdrawn for the same or any other tax year. Sub- Section (7) - Rescue mechanism for domestic companies • In case of a person, being a domestic company, where the option exercised by it under section 201, has been rendered invalid due to violation of the conditions contained in section 205(2)(b) or (c) or (d). • Section 205(2)(b) - Use of new machinery or plant â....

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....using new plant and machinery. • Such guidelines required prior approval of the Central Government • It allows such companies to opt for the 22% concessional tax regime under Section 200, ensuring continuity of a lower corporate tax rate even after violation of Section 201 conditions. From  to 31.03.2026 Section 115BAA: 22% rate of tax on certain Domestic Companies [ read with Rule 21AE ] Conditions: - • All Domestic Companies can pay income tax with a 22% tax rate (with applicable cess and surcharge). • Company should not claim benefit of other deductions under IT Act :- • Section 10AA: Deductions from the Special Economic Zones (SEZ) unit. • Sectio....

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....ised it can't be withdrawn for the same or any other PY. • As per the rules of CBDT, this option will be present in Form 10-IC. One needs to submit the form online under EVC or a digital signature. • Other Income like Income from House Property, Income from Other Sources etc shall be taxable @22%. • Special Income shall be taxable as per Special Rates of Tax i.e., U/s 111A, 112, 112A • Surcharge will be applicable @10% irrespective of Total Income. • Health & Education Cess will be levied @ 4% always. • Company opting for tax rate under section 115BAA is not required to pay MAT, Brought Forward MAT credit cannot be setoff against income u/s 115BAA. (If assessee ha....