Section 115BA of ITA, 1961 : Section 115Ba: Tax On Income Of Certain Domestic Companies

Explanation using Example

Imagine a scenario where "XYZ Manufacturing Pvt. Ltd." is a domestic company that was registered on April 10, 2016. The company exclusively engages in the production of eco-friendly packaging materials. For the financial year 2021-2022, the company decides to opt for a lower tax rate of 25% as per Section 115BA of the Income-tax Act, 1961.

To qualify for this lower tax rate, XYZ Manufacturing Pvt. Ltd. ensures that:

• It is not claiming any special deductions or depreciation benefits that are not allowed under this section.
• It does not set off any loss from previous years that are linked to such deductions.
• Its depreciation is calculated as prescribed, excluding the additional depreciation usually claimed by companies.

The company files its tax return by the due date and opts for the 25% tax rate in the prescribed manner. Once this option is chosen, it applies to this financial year and cannot be withdrawn in subsequent years.