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CA V.B. Prabhu Verlekar Circullar

FINANCIAL YEAR 2019 - 2020

Statutory Tax Obligations & Compliances

NEW TAX RATES FOR CERTAIN DOMESTIC COMPANIES

*Under Section 115BAA, a domestic company can opt for a lower rate of 22% from A.Y. 2020-21. However, such option is subject to fulfilment of conditions that no benefits, additional depreciation and tax holidays can be claimed by the company. Further, the company cannot set-off losses on account of such benefits claimed in earlier years. Once the option is exercised the same cannot be withdrawn.

Under Section 115BAB, a domestic company which is registered on or after 01-10-2019 and commences manufacturing on or before 31-03-2023 can opt for a lower rate of 15% from A.Y. 2020-21. The manufacturing facilities cannot be formed by reconstruction or using second-hand assets and such other conditions. Further, such option is subject to fulfilment of conditions that no benefits, additional depreciation and tax holidays can be claimed by the company. Further, the company cannot set-off losses on account of such benefits claimed in earlier years. Once the option is exercised the same cannot be withdrawn.

The Minimum Alternate Tax rate is reduced to 15% and in case of companies opting for above lower tax rates, the Minimum Alternate Tax is not applicable.


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