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Microlesson · 5-min read

Domestic Companies — Rates of Tax (incl. 115BAA & 115BAB)

# Domestic Companies and Rates of Tax

## Applicable Rates

SituationRate
Total turnover/gross receipts in PY 2023-24 ≤ ₹400 crore25% of total income
Any other case30% of total income
Domestic manufacturing company (set up/registered on/after 1.10.2019, commences manufacture before 31.3.2024) opting 115BAB15% of income from/incidental to manufacturing
Domestic company opting 115BAA22% of total income

## Concessional Regimes (115BAA / 115BAB) — Conditions

  • No deductions under: 10AA, 33AB, 33ABA, 35(1)(ii)/(iia)/(iii), 35(2AA), 35(2AB), 35AD, 35CCC, 35CCD, additional depreciation u/s 32(1)(iia), and Chapter VI-A deductions except 80JJAA and 80M.
  • Set-off restriction: Brought-forward losses & unabsorbed depreciation relating to the excluded deductions cannot be set off.

## Surcharge

SituationSurcharge
TI > ₹1 cr ≤ ₹10 cr (slab rates)7% — marginal relief like individuals
TI > ₹10 cr (slab rates)12% — marginal relief like individuals
Opting 115BAA / 115BAB10% flat — NO marginal relief

Common to companies: Special rates u/s 112, 112A, 111A apply to capital gains. Marginal relief is available (computed on the individual logic) for companies under the slab rates.

Worked example

### Example 1

Turnover-based rate: A domestic company with PY 2023-24 turnover of ₹350 crore is taxed @25%. If turnover had been ₹450 crore, the rate would be 30% (unless it opts for a concessional regime).

### Example 2

115BAA surcharge: A company opting for 115BAA pays tax @22% + surcharge @10% (flat) + 4% cess. No marginal relief applies, and 80JJAA/80M deductions remain available while other listed deductions are forgone.

⚠️ Common exam mistakes

  • Using the wrong financial year's turnover for the 25% test — it is PY 2023-24 turnover for the relevant assessment year, ≤ ₹400 crore.
  • Allowing marginal relief to companies under 115BAA/115BAB — surcharge is a flat 10% with no marginal relief.
  • Forgetting that 80JJAA and 80M remain available even under 115BAA/115BAB.
  • Applying the 15% rate of 115BAB to all income rather than only manufacturing/incidental income.
Reference: 115BAA, 115BAB
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