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Modification of Concessional Tax Rate Scheme for a Domestic Company under Section 115BAA and 115BAB from Assessment Year 2021-22

Taxation Law (Amendment) Act inserted two new sections (section  115BAA and section 115BAB) to provide domestic companies with  an option to be taxed at concessional tax rates.

Various conditions  are provided in these provisions to opt for the new tax regimes  including non-availability of deductions under Chapter-VIA except  deductions under Section 80JJAA or Section 80LA.

The Finance  Bill 2020 proposes to allow the deduction, to the companies opting for the concessional rates, under section 80M as well. Section  80M is a new section which is proposed to be inserted to provide  for deduction in case of inter-corporate dividends. 

At present, the concessional tax rate of 15% under section 115BAB  is allowed to new domestic manufacturing companies.

To attract  investment in the power sector, Finance Bill proposed to extend  the benefit of the concessional corporate tax rate of 15% to new  domestic companies engaged in the business of generation of  electricity.

Section 115BAB has been proposed to be amended  to consider the generation of electricity as manufacturing or  production of any article or thing. Hence, the benefit of the  concessional rate under section 115BAB shall also be available to  companies engaged in the business of generation of electricity.
Whether ‘Individuals or HUFs’ should opt for New Tax Regime of Section 115BAC from Assessment Year 2021-22 Tax Amendments in Finance Bill 2020 Amendments of ‘Residential Status’ for Assessment Year 2021-22
Income Tax Slab for Financial Year 2020-21 (AY : 2021-22)

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