With the recent changes in the taxation rates of Companies, we are attaching a tabular presentation of the same for easier reading and understanding. This would enable you to decipher which option might be more beneficial for you to lower your tax outgo. Please note these clauses only applies to Companies and not to other forms of businesses.

1. Page | 1
`
Analysis of Sec 115BAA and
115BAB of the Income Tax
<<<<<<
S&A Knowledge Series
Prepared by Ankita Agarwal Assistant Manager (Direct tax)
Vetted by Aswani Kumar Partner
www.sethspro.com info@sethspro.com New Delhi | Lucknow | Coimbatore

2. Page | 2
Analysis of Section 115BAA and 115BAB
(Added by the Taxation Laws Ordinance, 2019 i.e. A.Y. 2021)
Section 115BAA and 115BAB Provides Benefit of Reduced Tax Rate to certain
Domestic Company and Domestic Manufacturing Company respectively, subject to
other provision of Chapter XII.
Following is the tabular difference between both the sections for an easier reading and
understanding which option to exercise.
Particulars Section 115BAA Section 115BAB
Applicable Tax on certain Domestic
Companies (need not be
manufacturing concerns;
can be any business)
New Manufacturing
Companies to have
commenced manufacturing
before 01st Oct 2023
Date of Incorporation Irrespective of date on
which company registered
and setup.
On or after 1st October, 2019
Tax Rate 22% plus 10% surcharge
and 4% cess = 25.17%
15% plus 10% surcharge and
4% cess = 17.16%
Whether any conditions
regarding new
undertaking not formed
by splitting up existing
business
No, therefore can be by
splitting an existing
business.
Should not be formed by
splitting or reconstruction of a
business already in existence
Whether nonuse of
secondhand plant and
machinery and building
earlier used as hotel or
convention centre is
No, therefore secondhand
machine can be used
without violating the
condition.
Not to use any plant and
machinery earlier used for any
purpose. However imported
second hand machinery is
allowed on which deprecation

3. Page | 3
Particulars Section 115BAA Section 115BAB
applicable under the
section
has not been claimed ever in
India.
Exemption from MAT u/s
115JB
Yes Yes
When option for benefits
Should be exercised
On or before the due date of
furnishing the return for
any previous year relevant
to the assessment year
commencing after 01/04/20
On or before the due date of
furnishing the first return of
income which the assessee is
required to furnish under the
provision of the Act.
What happens to existing
unutilised MAT credit
Unutilised MAT credit
lapses if company opts for
section 115BAA (As
clarified by CBDT’s
Circular)
Not Applicable since MAT was
never payable under the
section.
Can the option once
exercised be changed in
the subsequent year?
No. Once availed it remains
the same always.
No. Once availed it remains the
same always.
Other relevant points:
1. Company should not claim benefit of deduction under section 10AA, Sec. 32(1)(iia),
sec. 32AD, Sec. 33AB, Sec. 33ABA, Sec. 35(1)(ii), Sec. 35(1)(iia). Sec. 35(1)(iii), Sec.
35(2AA), Sec. 35(2AB), Sec. 35AD, Sec 35CCC,Sec. 35CCD. Company should not claim
the benefit of provisions of chapter VI-A except the provision of Sec. 80JJAA.
2. Company cannot set off any loss carried forward from any earlier AY if such loss is
attributed to any deduction referred above.
3. Surcharge is applicable @10% irrespective of total income.
Seth & Associates was established in 1975 and since then it has been providing
unparalleled value addition to its client. We are a firm with diverse and rich exposure
in various fields. All our partners are full time active working partners looking into
specific sector domains such as Corporate Law, Direct Tax, Indirect Taxes, Raising
Capital (Bank and Equity), Business Advisory solutions, Forensic and Information
Technology audit and many other core sectors relevant to overall growth of the clients.
The information herein contained is of a general nature and is not intended to address
the circumstances of any particular individual or entity. Although we endevour to
provide accurate and timely information, there can be no gurantee that such
information is very accurate and considers the latest amendment in laws which are
very frequent. The above is purely for academic reading and general awareness of the
law. No one should act on this information without appropriate professional guidance
which requires a thorough exemation of a particular situation.
This content is owned by Seth & Associates, Chartered Accountants and is not be
reproduced without our explicit permission.
www.sethspro.com | info@sethspro.com
New Delhi | Lucknow | Coimbatore