Tax Ready Reckoner

1. Overview Section 115BA provides a concessional tax rate of 22% (plus surcharge & cess) for new domestic manufacturing companies that do not claim specified exemptions/deductions. Introduced to boost the “Make in India” initiative, this provision applies from FY 2019-20 (AY 2020-21) onwards. 2. Eligibility Conditions A company can opt for Section 115BA if it meets all of the following: Type of Company: Domestic company incorporated on or after […]

Section 115BAA of the Income Tax Act, 1961 provides a concessional tax rate of 22% (plus surcharge & cess) for domestic companies that forgo specified exemptions and deductions. Introduced in 2019, this regime aims to simplify taxation, enhance competitiveness, and attract investment. Below is a detailed breakdown of its key provisions: 1. Applicability & Key Features (A)  Eligible Companies Domestic companies(incorporated in India). Not applicableto

Section 115BAB of the Income Tax Act, 1961 provides a concessional tax rate of 15% (plus surcharge & cess) for new domestic manufacturing companies, subject to strict eligibility conditions. Introduced in 2019, this provision aims to boost India’s manufacturing sector under the “Make in India” initiative. Below is a detailed breakdown: 1. Eligibility Criteria To avail benefits under Section 115BAB, a company must satisfy all of the following:

Section 115JB ensures that companies with substantial book profits but low or no taxable income (due to exemptions/deductions) pay a minimum tax. Below is a detailed breakdown of its key provisions: 1. Objective of MAT Prevents tax avoidanceby “zero-tax companies” that report high profits but pay little/no tax due to exemptions. Ensures equitable taxationby mandating a minimum tax contribution from profitable companies. 2. Applicability of

1. Purpose of Section 115JAA Allows companies to claim creditfor excess MAT paid (when MAT > normal tax) in subsequent years where normal tax liability exceeds MAT. Prevents double taxation and ensures fairness for companies subject to MAT. 2. Eligibility for MAT Credit Applies only if: Company has paid MAT under Section 115JBin any previous year. Normal tax liability(under regular

Section 115JB(2) mandates that the Statement of Profit & Loss (P&L) for MAT computation must be prepared as per Schedule III of the Companies Act, 2013, with specific adjustments. Below is a structured breakdown: 1. Legal Requirement Companies must compute “Book Profit”for MAT (Minimum Alternate Tax) based on: Net Profit(as per P&L prepared under Companies Act, 2013). Adjustments(additions/deductions) as prescribed in Section 115JB(2).

Section 115JB mandates that companies calculate Minimum Alternate Tax (MAT) based on book profits (derived from financial statements) rather than taxable income. Below is a step-by-step guide to computing book profit, including adjustments under Explanation 1 to Section 115JB(1) & (2). 1. Legal Basis Section 115JB(1): Defines MAT liabilityas 15% of book profit (plus surcharge & cess). Explanation 1 to Section 115JB(2): Specifies adjustmentsto net profit for computing

Under Explanation 1(iii) to Section 115JB(2), companies can deduct the lower of: Brought forward losses(as per books), or Unabsorbed depreciation(as per books) from the net profit while computing book profit for MAT (Minimum Alternate Tax). 1. What Qualifies for Deduction? Only losses/depreciation recorded in the books(not as per Income Tax Act). Lossesmust be carried forward in the balance sheet. Unabsorbed depreciationmust be not adjusted in previous years.

Section 115JB(4) of the Income Tax Act, 1961, mandates that companies liable for Minimum Alternate Tax (MAT) must submit a Chartered Accountant (CA)-certified report in Form No. 29B. This report confirms the accuracy of book profit computation for MAT. Below are the key provisions: 1. When is the Report Required? All companies(including foreign companies with PE in India) liable for MAT must file Form 29B. Exemptions: Companies

Under the Income Tax Act, 1961, Sections 115QA to 115QC impose a tax on distributed income when a domestic company buys back its own shares from shareholders. This provision was introduced to prevent tax avoidance through buyback schemes. 1. Applicability (Section 115QA) ✅ Applies to: Domestic unlisted companiesbuying back their own shares. Listed companiesif buyback is not through open market (i.e., tender offers). ❌ Does not