Who Can Opt for the Reduced 22% Corporate Tax Rate Under Section 115BAA?

Form 10-IC is important for choosing this option under Section 115BAA. It must be filed electronically by the applicable income-tax return due date.

Once the option is exercised, it generally applies to subsequent assessment years and cannot be withdrawn. Another benefit is that companies opting for Section 115BAA are not subject to MAT under Section 115JB. However, accumulated MAT credit from earlier years cannot be used after opting for this regime.

The company should check the applicable provisions and filing requirements for the relevant assessment year.

The main consideration is the deductions the company gives up. Under Section 115BAA, companies cannot claim several specified benefits, including additional depreciation and certain deductions relating to SEZ units, investment allowances, specified business activities and certain Chapter VI-A deductions.

Some deductions remain available, such as Section 80JJAA for eligible additional employee costs and Section 80M, subject to their respective conditions.

A company should calculate the impact of losing these deductions before opting for the concessional rate. The lower headline rate does not automatically mean a lower final tax bill.

Yes. Section 115BAA is available to existing domestic companies as well as newly established domestic companies, provided they satisfy the prescribed conditions. There is no general minimum or maximum turnover requirement for choosing this option.

The concessional rate is 22% of taxable income. However, the company must calculate its taxable income without claiming certain specified deductions and incentives. So, it is important to compare the tax payable under the normal provisions with the tax payable under Section 115BAA before making the choice.