Understanding Section 115BAA: A Boost for Domestic Companies

Introduction: Section 115BAA, introduced via the Taxation Ordinance 2019, offers reduced tax rates to domestic companies. Tax Rate: Domestic companies can opt for a favorable tax rate of 22% under Section 115BAA, effective from the financial year 2019-20.

Minimum Alternate Tax (MAT): MAT rate reduced to 15% from 18.5%, enhancing the appeal of the tax framework. Opting for Section 115BAA: Companies can choose to avail the benefits from the assessment year 2020-21 onwards.

Process for Exercising Option: Companies must electronically submit details via Form 10-IC by the specified due date. Conditions to Satisfy: Certain deductions under various sections are not allowed while computing total income for Section 115BAA.

New Rates: Effective tax rate under Section 115BAA is 25.168%, offering a competitive advantage to domestic companies. MAT Exemption: Companies under Section 115BAA are exempt from MAT, and cannot offset tax liabilities with MAT credits.