New IT Act 2025 — Knowledge Bank

Tax on income of new manufacturing domestic companies

Section 201 — Tax on income of new manufacturing domestic companies

Old Act equivalent: Section 115BAB of IT Act 1961 Sub-part: C—New tax regime

Statutory Text

  1. (1) Irrespective of anything contained in this Act, but subject to the provisions of Parts A, B, E and this Part (other than sections 199 and 200) of this Chapter, the

income-tax payable in respect of the total income of an assessee, being a domestic company, specified in column B of the Table below, shall, at the option of such as sessee, be computed at the rates specified in column C, if the conditions contained in column D thereof are fulfilled. TABLE Sl. No. Assessee Total income and rate of tax Conditions A B C D 1. A domestic company engaged in business of manufac ture or pro duction of any article or thing. (a) 15% on the total in come other than the income mentioned in clauses (b), (c) and (d); (b) 22% (without any deduction or allow ance in respect of any expenditure or allowance) on such income,—

(i) which has nei ther been de rived from nor is incidental to manufacturing or production of an article or thing; and

(ii) in respect of which no spe cific rate of tax has been provided sep arately under Parts A, B, E and this Part of this Chapter; (c) 22% on short-term capital gains de rived from transfer of a capital asset on which no depreci ation is allowable under this Act; (d) 30% on the income deemed so under section 205(4). Such domestic company— (a) exercises the option in the manner provided in sub-section (2); (b) has been set-up and reg istered on or after the 1st October, 2019; (c) has commenced manufac turing or production of an article or thing on or before the 31st March, 2024; (d) the total income of which is computed as per the provisions of sub-section (3); and (e) fulfils all the conditions provided in sub-section (5) of this section and section 205(2).

(2) The option under this section shall be exercised by the assessee in the manner prescribed subject to the following conditions:—

(a) it shall be exercised on or before the due date specified under section 263(1) for furnishing first of the returns of income for any tax year;

(b) such option, once exercised, shall apply to subsequent tax years;

(c) once the option has been exercised for any tax year, it shall not be sub sequently withdrawn for the same or any other tax year; and

(d) where the assessee fails to fulfil the conditions contained in sub-section (1) (Table: Sl. No. 1.D) in any tax year,—

(i) the option shall become invalid in respect of such tax year and subsequent tax years; and

(ii) the other provisions of this Act shall apply, as if the option had not been exercised for that tax year and subsequent tax years. (3) For the purposes of sub-section (1), the total income of the assessee shall be computed,—

(a) without any deduction under—

(i) section 45(2) or 47(1)(b); or

(ii) Chapter VIII other than section 146 or 148; or

(iii) sections specified in section 205(1)(a) to (g);

(b) without set off of any loss or allowance for unabsorbed depreciation deemed so under section 116, if such loss or depreciation is attributable to any of the deductions referred to in clause (a). (4) While computing the income of the assessee, the loss and depreciation, or both, as specified in sub-section (3)(b) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation, or both, shall be allowed for any subsequent year. (5) In case of an amalgamation, option under this section shall remain valid in case of the amalgamated company only and if the conditions contained in sub-section (1) (Table: Sl. No. 1.D) are continued to be fulfilled by such company. New tax regime for individuals, Hindu undivided family and others.

Provisos

None.

Explanations

None.

Tables

See statutory text above.

Key Structure

  • Applies to: New domestic manufacturing company set up and registered on or after 1-Oct-2019, commencing manufacture by 31-Mar-2024.
  • Conditions: Option exercised; total income computed without specified deductions; not formed by splitting/reconstruction.
  • Time limits: Option before due date for filing return; irrevocable.
  • Monetary limits: Tax at 15% plus applicable surcharge and cess.
  • Exceptions: Conditions in section 205 apply; invalid option if conditions breached.

Cross-References

Amendment Notes

None noted from the extracted pages.

Practical Notes

  • Circular 5/2025

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