Definition
Section 115BAA Concessional Corporate Tax
This regime lets domestic companies pay corporate tax at a lower rate provided they forgo most exemptions and incentives.
To boost investment, the government introduced an optional concessional corporate tax regime under which a domestic company can pay tax at a reduced rate if it gives up specified exemptions, incentives and accumulated MAT credit. A still lower rate is available to eligible new manufacturing companies.
The move sharply cut effective corporate tax for many firms and aligned India's rates more closely with peers, aiming to attract manufacturing investment. Companies opting in are generally exempt from Minimum Alternate Tax, simplifying their tax position.
Related terms
- Minimum Alternate Tax (MAT)Minimum Alternate Tax ensures that profitable companies which reduce their tax to near zero through exemptions still pay a minimum tax on their book profits.
- MAT CreditMAT credit is the excess of Minimum Alternate Tax paid over a company's normal tax liability, which can be carried forward and set off in future years.
- Section 115BAC New Tax RegimeThe new tax regime offers lower income-tax slab rates in exchange for forgoing most exemptions and deductions, available as an optional alternative to the old regime.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.