Applicability of Section 115BAA?
Section 115BAA of Income Tax Act is applicable to all domestic companies other than the companies engaged in manufacturing activities and opted for concessional rate of tax u/s 115BA or 115BAB from the Financial Year 2019-20 (AY 2020-21) onwards subject to compliance of certain conditions.
Rate of Tax applicable?
What are Conditions to be complied with?
Domestic companies opting for section 115BAA shall compute the total income without giving effect of following deduction/incentives.
Domestic Companies opting under this section cannot set off of losses carried forward from earlier years, if such losses were incurred in respect of aforementioned deductions/incentives.
What is the Time limit for exercising the option?
Domestic Companies will have to exercise the option to be taxed under section 115BAA on or before the due date for filing of income tax return. For the FY 19-20 due date for filing of Income tax return covered under tax audit is 31st Oct which has been extended to 30th November by the finance ministry due to COVID 19.
Can a company opt out of section 115BAA?
No, Once the company opts for section 115BAA in a particular financial year, it cannot be withdrawn subsequently.
Whether MAT is applicable in case of companies opt for section 115BAA?
No, Companies opt for section 115BAA will not be required to pay Minimum Alternate Tax (MAT) under section 115JB and whatever the MAT credit available as on date of exercising the option under this section will lapse (i.e. cannot adjust the MAT credit carried forward from earlier assessment year against the regular income tax liability).
Whether a company is required to file any form for exercising the option?
Companies wishing to opt for section 115BAA shall exercise the option in form 10 IC for any previous year relevant to the assessment year beginning on or after 01st April, 2020.
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