Financial & Legal

The Indian government is focusing on tax reforms to make the business environment more conducive for growth. The introduction of Section 115BAA of the Income Tax Act is one of the significant reforms aimed at reducing corporate tax rates and simplifying the tax filing process for domestic companies.

For Indian businesses, navigating through multiple deductions and exemptions has often been complicated and time-consuming. Section 115BAA offers a simplified tax structure by imposing a lower tax rate of 22% while eliminating the need to claim various tax deductions. This is especially important in India, where reducing corporate taxes can make companies more competitive both domestically and globally.

What You Should Know About Section 115BAA

Under Section 115BAA, companies can opt to pay taxes at a reduced rate of 22% but must give up several incentives, such as deductions on accelerated depreciation and MAT credit.

Benefits:

• Lower Tax Rate: The section allows companies to enjoy a lower tax rate of 22%, with a total effective rate of around 25.17%.


• No Need for Deductions: Companies no longer need to navigate the complexities of various tax deductions and incentives.


• Flexible Entry: Companies can opt for this regime in any financial year but cannot switch back once opted.

Learn More at Beshak

If you’re looking for a clearer understanding of Section 115BAA, Beshak offers an in-depth analysis of its benefits, limitations, and long-term impact. To get a full overview of how it can impact your corporate taxes, visit Beshak’s article.

https://www.smcinsurance.com/income-tax/articles/section-115baa-of-income-tax-act

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