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 October 1, 2019.
- Engaged in manufacturing or production(not just trading or services).
- No Exemptions Claimed:
- Must notclaim deductions under:
- Chapter VI-A (e.g., 80IA, 80IB, 80IC)
- Section 10AA (SEZ benefits)
- Additional depreciation (Section 32(1)(iia))
- Any other special tax incentives.
- Must notclaim deductions under:
- Opt-In Requirement:
- Must exercise the optionin the first year of eligibility (irrevocable thereafter).
3. Applicable Tax Rate
| PARTICULARS | RATE | EFFECTIVE RATE (INCL. SURCHARGE & CESS) |
| Base Tax Rate | 22% | – |
| Surcharge (if applicable) | 10% (if income > ₹1 crore) | – |
| Health & Education Cess | 4% on (tax + surcharge) | ~25.17% (if income > ₹1 crore) |
Example Calculation:
- Taxable income = ₹5 crore
- Tax = 22% of ₹5 crore = ₹1.1 crore
- Surcharge (10%) = ₹11 lakh
- Cess (4%) = ₹4.84 lakh
- Total Tax = ₹1,25,84,000
4. Key Benefits
✔ Lower Tax Rate: 22% vs. standard 30% for regular companies.
✔ No MAT (Minimum Alternate Tax): Companies under 115BA are exempt from MAT (Section 115JB).
✔ Simplified Compliance: No need to maintain complex exemption-related records.
5. Restrictions & Considerations
❌ No Carry Forward of Losses: If the company opts for 115BA, unabsorbed depreciation/losses from earlier years cannot be carried forward.
❌ Irrevocable Choice: Once opted, the company cannot switch back to the normal tax regime.
❌ Not for Existing Companies: Only for new manufacturing setups (incorporated after Oct 1, 2019).
6. Comparison with Other Concessional Rates
| SECTION | APPLICABILITY | TAX RATE | MAT APPLICABLE? | KEY CONDITION |
| 115BA | New manufacturing cos. | 22% | No | No exemptions claimed |
| 115BAA | Any domestic company | 22% | No | Must forgo exemptions |
| 115BAB | New manufacturing (before Mar 2024) | 15% | No | Must start production by Mar 2024 |
7. Compliance & Filing
- Option Declaration: Must be filed before the due dateof ITR filing (usually October 31).
- Audit Requirement: If turnover exceeds ₹1 crore (Section 44AB).
- Form 10-IC: Not required (unlike Section 115BAA/BAB).
8. Recent Updates (2024)
- No extension for Section 115BAB: The 15% rate for new manufacturing companies (Section 115BAB) ended on March 31, 2024, making 115BA (22%)the only remaining concessional rate for new manufacturers.
