1. Overview

Section 115BA provides a concessional tax rate of 25% (plus surcharge and cess) for domestic companies that meet specific conditions. This section was introduced to benefit smaller companies and promote ease of doing business.

2. Eligibility Criteria

• Turnover Limit: Total turnover or gross receipts in the previous year 2015-16 should not exceed ₹400 crores
• Company Type: Must be a domestic company
• Manufacturing/Production: Primarily engaged in manufacturing or production of any article or thing
• No Special Deductions: Company should not claim certain specified deductions

3. Tax Rate Structure

4. Conditions and Restrictions

Companies opting for Section 115BA cannot claim the following deductions:

• Section 10AA - Special Economic Zone (SEZ) deduction
• Section 32(1)(iia) - Additional depreciation
• Section 32AD - Investment in new plant and machinery
• Section 33AB - Tea/Coffee/Rubber development account
• Section 33ABA - Site restoration fund
• Section 35(1)(ii)/(iia)/(iii) - Expenditure on scientific research
• Section 35(2AA)/(2AB) - Research association contributions
• Section 35AD - Specified business deduction
• Section 35CCC - Agricultural extension project expenditure
• Any deduction under Chapter VI-A except Section 80JJAA

5. Practical Example

6. Case Laws

7. Key Takeaways

• Beneficial for companies with turnover not exceeding ₹400 crores in FY 2015-16
• Lower tax rate of 25% compared to regular rate of 30%
• Cannot claim MAT credit
• Option is irrevocable once exercised
• Must file return on or before due date under Section 139(1)

1. Overview

Section 115BAA was introduced by the Taxation Laws (Amendment) Act, 2019, effective from AY 2020-21. It provides an option to domestic companies to pay tax at a reduced rate of 22% (plus surcharge and cess) if they forego certain exemptions and incentives.

2. Eligibility Criteria

• Company Type: Must be a domestic company
• Option Exercise: Company must exercise the option on or before the due date of filing return under Section 139(1)
• No Backward Switching: Once exercised, the option cannot be withdrawn in subsequent assessment years
• Form Submission: Option must be exercised in Form 10-IC

3. Tax Rate Structure

4. Conditions and Deductions Not Allowed

Companies opting for Section 115BAA cannot claim:

• Section 10AA - SEZ deduction
• Section 32(1)(iia) - Additional depreciation
• Section 32AD - Investment allowance
• Section 33AB - Tea/Coffee/Rubber development account
• Section 33ABA - Site restoration fund
• Section 35(1)(ii)/(iia)/(iii) - Scientific research expenditure
• Section 35(2AA)/(2AB) - Research association contributions
• Section 35AD - Specified business deduction
• Section 35CCC - Agricultural extension project
• Any deduction under Chapter VI-A except Section 80JJAA (Employment generation)

5. Book Profit vs Taxable Income

Important Note: Companies opting for Section 115BAA are NOT required to pay Minimum Alternate Tax (MAT) under Section 115JB. The tax computed under this section is deemed to be the tax payable.

6. Practical Examples

7. Case Laws & Important Rulings

8. Key Takeaways

• Reduced tax rate of 22% (effective 25.168%) for all domestic companies
• No MAT liability - significant benefit for companies with high book profits
• Option once exercised is permanent - cannot switch back to normal regime
• Must forego various deductions and incentives
• Existing MAT credit will lapse upon opting for this section
• Ideal for companies not claiming significant deductions
• Form 10-IC must be filed on or before due date of return

1. Overview

Section 115BAB provides a highly concessional tax rate of 15% (plus surcharge and cess) for new domestic manufacturing companies. This section was introduced to promote "Make in India" initiative and attract investment in the manufacturing sector. The effective tax rate comes to approximately 17.16%.

2. Eligibility Criteria

Key Conditions for Eligibility:

• Setup Date: Company must be set up and registered on or after 1st October 2019
• Commencement: Must commence manufacturing or production on or before 31st March 2024 (extended from 31st March 2023)
• Nature of Business: Engaged only in manufacturing or production of any article or thing
• No Pre-existing Business: Not formed by splitting up or reconstruction of existing business
• No Used Plant & Machinery: Does not use plant and machinery previously used for any purpose (except if total value of old machinery does not exceed 20% of total plant and machinery)
• No Specified Business: Not engaged in business referred to in Section 35AD(8)(d)

3. Tax Rate Structure

4. Business Not Eligible

Section 35AD(8)(d) specifies following businesses are not eligible:

• Any business of laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution
• Any business of operating a cold chain facility
• Any business of laying and operating a slurry pipeline for the transportation of iron ore
• Any warehousing facility for storage of sugar
• Any business of operating and maintaining a hospital with at least 100 beds
• Any business of developing and building affordable housing project
• Any business of production of fertilizer in India
• Any business of operating and maintaining an inland container depot or a container freight station

5. Conditions and Restrictions

Companies opting for Section 115BAB cannot claim:

• Section 10AA - SEZ deduction
• Section 32(1)(iia) - Additional depreciation
• Section 32AD - Investment allowance
• Section 33AB - Tea/Coffee/Rubber development account
• Section 33ABA - Site restoration fund
• Section 35(1)(ii)/(iia)/(iii) - Scientific research
• Section 35(2AA)/(2AB) - Research association
• Section 35AD - Specified business
• Section 35CCC - Agricultural extension project
• Any Chapter VI-A deduction except Section 80JJAA

Additional Requirements:

• Option must be exercised in Form 10-ID on or before due date of filing return under Section 139(1)
• Once option is exercised, it is applicable for all subsequent assessment years
• No MAT liability under Section 115JB

6. Plant & Machinery Rules

20% Used Machinery Rule:

A company can use previously used plant and machinery if:

• The aggregate value of used plant and machinery does not exceed 20% of the total value of plant and machinery used
• The used plant and machinery was not previously used in India by any other person

7. Practical Examples

8. Case Laws & Important Rulings

9. Key Takeaways

• Lowest corporate tax rate at 15% (effective 17.16%)
• Significant incentive for new manufacturing investments
• Strict eligibility criteria - only for genuinely new manufacturing companies
• No MAT liability
• Setup after 1st October 2019, commence by 31st March 2024
• Cannot use substantial old machinery (more than 20%)
• Not formed by splitting or reconstruction
• Ideal for greenfield manufacturing projects
• Option once exercised is permanent

1. Overview

Section 115BAC introduces an optional new tax regime for individuals and Hindu Undivided Families (HUFs) with lower tax rates but with reduced exemptions and deductions. This was introduced in Finance Act 2020 and made the default option from FY 2023-24 (AY 2024-25) onwards. From AY 2024-25, the new tax regime under Section 115BAC is the default regime unless the taxpayer opts out.

2. Tax Slab Rates - Assessment Year 2025-26

3. Standard Deduction and Rebate

4. Deductions and Exemptions NOT Available

The following deductions and exemptions are NOT available under Section 115BAC:

5. Deductions Still Available

Limited deductions available under new tax regime:

• Section 80CCD(2): Employer's contribution to NPS (up to 10% of salary for private employees, 14% for government employees)
• Section 80JJAA: Employment generation deduction (for business income)
• Standard Deduction: ₹75,000 for salary income
• Standard Deduction: ₹25,000 for family pension
• Exemptions: Conveyance allowance, transport allowance for differently abled persons, and certain other specified allowances

6. Opting In and Out Mechanism

7. Practical Examples

8. Case Laws & Important Circulars

9. Decision Making Framework

Choose OLD Regime if:

• You have high HRA exemption claim
• Significant 80C investments (₹1.5 lakhs+)
• Home loan interest deduction (above ₹2 lakhs)
• High medical insurance premiums
• Multiple deductions under Chapter VI-A
• Income below ₹12 lakhs with full 80C utilization

Choose NEW Regime (115BAC) if:

• Income above ₹15 lakhs with minimal deductions
• You don't have home loan
• No significant investments in 80C instruments
• Lower HRA or no HRA
• You prefer simplicity in tax filing
• Your 80C investments + HRA + other deductions < ₹3 lakhs

10. Key Takeaways

• Default regime from AY 2024-25 onwards
• Lower tax rates with fewer deductions
• Standard deduction of ₹75,000 available
• Salaried individuals can switch annually
• Business income taxpayers have limited switching options
• No HRA, 80C, 80D, and other popular deductions
• Beneficial for high-income taxpayers with minimal deductions
• Rebate u/s 87A available up to ₹7 lakh income
• No tax up to ₹7 lakh income (with rebate)

1. Overview

Section 115BAD provides an optional concessional tax regime for co-operative societies. This section was introduced by the Taxation Laws (Amendment) Act, 2021, and is effective from AY 2022-23. It aims to provide tax benefits to co-operative societies similar to those available to companies and individuals.

2. Tax Rate Structure

3. Eligibility and Conditions

Who can opt:

• All co-operative societies registered under Co-operative Societies Act, 1912 or any State Co-operative Societies Act
• Option must be exercised in Form 10-IF
• Option to be exercised on or before due date of filing return u/s 139(1)
• Once exercised, the option is applicable for all subsequent assessment years

4. Deductions Not Available

Co-operative societies opting for Section 115BAD cannot claim:

• Section 32(1)(iia) - Additional depreciation
• Section 32AD - Investment allowance for plant and machinery
• Section 33AB - Tea/Coffee/Rubber development account
• Section 33ABA - Site restoration fund
• Section 35(1)(ii)/(iia)/(iii) - Scientific research expenditure
• Section 35(2AA)/(2AB) - Research association contributions
• Section 35AD - Specified business deduction
• Section 35CCC - Agricultural extension project expenditure
• Any deduction under Chapter VI-A (Sections 80C to 80U) except Section 80JJAA (employment generation)
• Set off of brought forward loss or unabsorbed depreciation if such loss or depreciation is attributable to deductions not allowed under this section

5. Comparison with Normal Tax Rate for Co-operatives

6. Types of Co-operative Societies

Common types that can benefit from Section 115BAD:

• Agricultural Co-operatives: Involved in farming, dairy, poultry, etc.
• Consumer Co-operatives: Retail stores, wholesale distribution
• Credit Co-operatives: Credit unions, co-operative banks (subject to restrictions)
• Housing Co-operatives: Housing societies
• Producer Co-operatives: Manufacturing and production
• Service Co-operatives: Transport, marketing, processing

7. Practical Examples

8. Case Laws & Circulars

9. Decision Making Points

Opt for Section 115BAD if:

• Society has minimal deductions under Chapter VI-A
• Income is substantial (above ₹50 lakhs)
• 80P deduction is less than the tax saving from lower rate
• Society prefers simpler tax compliance
• No significant additional depreciation claims

Continue with Normal Regime if:

• Substantial 80P deduction available
• Other Chapter VI-A deductions are significant
• Additional depreciation claims are substantial
• Income is relatively low (below ₹30 lakhs)
• Society has brought forward losses with restricted deductions

10. Key Takeaways

• Concessional tax rate of 22% (effective 25.168%)
• Available to all co-operative societies
• Option once exercised is permanent
• Cannot claim most Chapter VI-A deductions except 80JJAA
• No MAT applicability
• Form 10-IF must be filed on or before due date
• Significant tax savings compared to normal 30% rate
• Ideal for societies with minimal deduction claims
• Brought forward losses from restricted deductions cannot be set off

1. Overview

Section 115BAE provides a concessional tax regime for certain foreign companies engaged in shipping business. This section was introduced to promote international shipping and attract foreign shipping companies to operate from India. The section provides for a lower tax rate subject to specific conditions.

2. Eligibility Criteria

A foreign company is eligible under Section 115BAE if:

• Nature of Business: Engaged in the business of operation of ships
• Company Type: Must be a foreign company
• Income Type: Income should be from operation of ships
• Documentation: Must maintain proper books of accounts
• Compliance: Should comply with transfer pricing and other regulations

3. Tax Rate Structure

Note: Foreign companies in general are taxed at 40% (plus surcharge and cess). Section 115BAE doesn't provide a reduced rate but clarifies the taxation mechanism for foreign shipping companies.

4. Income from Operation of Ships

Income covered under this section includes:

• Freight charges for transportation of goods or passengers
• Demurrage charges
• Charter hire charges
• Income from lease of ships
• Other income incidental to operation of ships

Presumptive Taxation Scheme (Section 44B):

Foreign shipping companies can opt for presumptive taxation under Section 44B where:

• 7.5% of gross receipts (freight, demurrage, etc.) is deemed as taxable income
• 40% tax on deemed income (effective 3% of gross receipts)
• No need to maintain detailed books of accounts
• Simplifies compliance for foreign shipping companies

5. Treaty Benefits

Double Taxation Avoidance Agreement (DTAA):

Many foreign shipping companies prefer to claim benefits under DTAA with their home country. Common DTAA provisions include:

• Complete exemption from Indian taxation
• Taxation only in the country of residence
• Reduced rate of taxation in source country
• More beneficial than domestic law in most cases

Example Countries with Beneficial Shipping Treaties:

• Singapore - Complete exemption in India
• Norway - Taxation only in Norway
• Denmark - Exemption from Indian tax
• Netherlands - Reduced taxation

6. Practical Examples

7. Compliance Requirements

Foreign shipping companies must comply with:

• Permanent Establishment (PE): Ensure activities don't create PE in India
• Transfer Pricing: Maintain documentation if transactions with associated enterprises
• Form 10F: File for claiming treaty benefits
• Tax Residency Certificate: Obtain from home country tax authorities
• PAN: Mandatory for filing returns in India
• Return Filing: File return by due date even if income is exempt
• Withholding Tax: Ensure proper TDS compliance by Indian payers

8. Case Laws & Important Rulings

9. Comparison with Domestic Shipping Companies

10. Key Takeaways

• Section 115BAE applies to foreign companies in shipping business
• Tax rate: 40% plus surcharge and cess (effective ~43.68%)
• Presumptive taxation under Section 44B: 7.5% of gross receipts deemed as income
• Effective tax rate under presumptive scheme: ~3% of gross receipts
• DTAA benefits often more favorable than domestic law
• Many countries provide complete exemption for shipping income
• Must file Form 10F and TRC for claiming treaty benefits
• PE considerations are crucial for foreign companies
• Demurrage and charter charges covered as shipping income
• Compliance with transfer pricing rules necessary

Flowchart 1: Corporate Tax Rate Selection (Domestic Companies)

Flowchart 2: Individual Tax Regime Selection (Section 115BAC)

Flowchart 3: Co-operative Society Tax Rate Selection (Section 115BAD)