FAQs on Section 115BAA – Concessional tax scheme

1. How is Section 115BAA beneficial to companies?

• Companies opting to pay income tax as per section 115BAA can take advantage of the concessional tax rates.

2. To which companies is section 115BAA applicable?

• Only domestic companies are eligible to opt for paying tax under section 115BAA

3. What is the tax rate applicable for companies opting for section 115BAA?

• The companies opting to pay tax under section 115BAA are liable to pay income tax at the rate of 22% on their total income.
• Surcharge shall be charged @ 10% irrespective of the amount of total income and Health & Education cess @ 4% shall also be charged.

4. How can companies opt to pay tax under section 115BAA?

• It is essential to file Form 10-IC to opt for section 115BAA on or before the due date for filing ITR under section 139(1).
• Companies who opt to pay tax under section 115BAA cannot withdraw it subsequently.

5. How to calculate taxable income under section 115BAA?

• The company shall not claim the following deductions from its total income,
  1. Section 10AA: Deduction in respect of export turnover of units established in special economic zones
  2. Section 32(1)(iia): Additional depreciation
  3. Section 32AD: Investment in new plant or machinery in notified backward areas in certain States.
  4. Section 33AB: Deduction on account of deposit in Tea, Coffee & Rubber development account.
  5. Section 33ABA: Deduction on account of deposit in Site Restoration Fund.
  6. Section 35(2AB), 35(2AA), 35(1) (ii), 35(1) (iii): Deduction on account of expenditure on scientific research.
  7. Section 35AD: Deduction in respect of capital expenditure on specified business
  8. Section 35CCC: Deduction in respect of notified agricultural expansion project
  9. Section 35CCD: Deduction in respect of notified skill development project
  10. Chapter VI A deductions other than section 80JJAA or 80M (units in International financial service centre can also avail deduction under section 80LA)

6. Can a company opt to pay tax as per section 115BAA, where the option exercised under section 115BAB has been rendered invalid due to violation of conditions given in section 115BAB?

• Yes, a company can opt to pay tax as per section 115BAA, where the option exercised under section 115BAB has been rendered invalid due to violation of conditions given in section 115BAB?

You can find a detailed FAQ on section 115BAB here,

7. Is MAT provisions under section 115JB applicable to companies opting for section 115BAA?

• The companies paying tax under section 115BAA are exempted from MAT provisions.

8. Can a company opting to pay tax under section 115BAA utilise the MAT credit availed by it in the previous years?

• No, MAT credit availed by the company in the previous years cannot be set off in the subsequent years if the company has opted to pay tax under section 115BAA.