Our Finance Minister in September 2019 had announced concessional tax rate for domestic companies at effective tax rate of 25.17% u/s 115BAA and for manufacturing domestic company at effective tax rate of 17.17% u/s 115BAB.
To read about the above two sections, CLICK HERE
The above tax rate are effective from FY 2019-20. Also the above tax rate are optional, hence one has to choose if they wish to shift and opt for the new tax rate or not.
Thus, to show the government that one has opted for the new section they will have to submit their option by filing a Form which would be Form 10 – IC and 10 – ID for section 115BAA and 115BAB respectively.
The forms were notified in February by Income Tax department, but are now available on e-filing website for submission. Hence, just choosing the option in ITR won’t help one opting for any of the above provision will also have to file the form.
Further the above Form needs to be filed before the due date for filing the return of income to be eligible to take benefit of such concessional tax rate.
The Form asks for various details relating to nature of activities undertaken by company, if the company has a unit in IFSC and a declaration that all the conditions shall be met by the company.
However, there is one issue in Form 10 – ID for section 115BAB where they ask for date of commencement of manufacturing, and as per section 115BAB the company has to start production till 31.03.2023.
Now if a company has not yet started production then it should not fill this form as it will not be having any income and the company opting for this section cannot be engaged in any business other than manufacturing. Thus, the company should file this form in the year when production starts.
Also an important thing to note in both the above sections is that once you have opted in the above sections you cannot withdraw the above sections yourself unless you dis-satisfy any conditions.