BooksIQDomestic companies can opt for a flat 22% income-tax rate (effective ~25.17% with surcharge and cess) BUT must forgo most exemptions, deductions, and MAT — and the election is IRREVOCABLE.
Key points
- Eligibility is open to any domestic company, including manufacturing companies.
- The tax rate is 22% + 10% surcharge + 4% Health and Education cess, giving an effective rate of about 25.168%.
- To opt in, the company must give up several benefits: (a) §10AA SEZ deduction;
- (b) §32(1)(iia) additional depreciation;
- (c) investment allowances under §32AD / §33AB / §33ABA;
- (d) scientific-research deductions under §35(1)(ii) / (iia) / (iii) / (2AA) / (2AB);
- (e) §35AD specified-business deduction;
- (f) deductions under §35CCC / §35CCD;
- (g) all of Chapter VI-A except §80JJAA and §80M;
- (h) set-off of brought-forward losses attributable to any of the above.
- Current-year normal depreciation and brought-forward depreciation or losses NOT linked to the above items DO continue.
- The election is filed in Form 10-IC and is IRREVOCABLE — once made, it applies to all subsequent FYs.
- MAT under §115JB does NOT apply to a §115BAA company, and any accumulated MAT credit is lost on exercising the option.
Reference: §115BAA, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §200
This page is general information for Indian businesses, current as of the
financial year shown above — not legal or tax advice. Tax law changes,
and how a provision applies depends on your specific facts. Confirm the
current position with a qualified professional before you act.
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