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Microlesson · 5-min read

Concessional Tax Rates for Companies and Co-operative Societies (115BAA, 115BAB, 115BAD, 115BAE)

## Concessional Tax Regimes for Companies & Co-op Societies

### 1. Section 115BAA — Domestic Company (Existing)

ComponentRate
Tax22%
Surcharge (compulsory)10%
Cess4%
Effective Rate25.168%

### 2. Section 115BAB — New Manufacturing Domestic Company / Electricity Generation Company

Conditions:

  • Company set up on or after 1.10.2019, AND
  • Starts manufacturing on or before 31.3.2024, AND
  • Not formed by splitting up or reconstruction of existing business.
ComponentRate
Tax15%
Surcharge (compulsory)10%
Cess4%
Effective Rate17.16%

### 3. Section 115BAD — Resident Co-operative Society (Existing)

ComponentRate
Tax22%
Surcharge (compulsory)10%
Cess4%
Effective Rate25.168%

### 4. Section 115BAE — New Manufacturing Resident Co-operative Society

Conditions:

  • Society set up on or after 1.04.2023, AND
  • Starts manufacturing on or before 31.3.2024, AND
  • Not formed by splitting up / reconstruction of existing business.
ComponentRate
Tax15%
Surcharge (compulsory)10%
Cess4%
Effective Rate17.16%

### Common Feature

Once an assessee opts for any of these regimes, certain deductions are not available (e.g., additional depreciation, SEZ deductions, Chapter VI-A except specific employment-related items).

Worked example

### Example 1

Effective Rate Calculation for 115BAA:

Tax = 22%

Surcharge = 10% × 22% = 2.2%

Subtotal = 22% + 2.2% = 24.2%

Cess = 4% × 24.2% = 0.968%

Effective Rate = 24.2% + 0.968% = 25.168%

⚠️ Common exam mistakes

  • Forgetting that the 10% surcharge under 115BAA/115BAB/115BAD/115BAE is COMPULSORY regardless of income level.
  • Applying these concessional regimes to companies/societies formed by splitting up an existing business — they are specifically excluded.
  • Missing the dual condition for 115BAB/115BAE: both setup date AND manufacturing start date must be met.
  • Claiming additional depreciation, Sec 35AD, or SEZ deduction after opting for concessional regime — these are not allowed.
Reference: Sections 115BAA, 115BAB, 115BAD, 115BAE — Income Tax Act, 1961
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