Income Tax Act

Official PDF pages 261–265

SOURCE PDF PAGE 261
( ii )   in any other case, a minimum of 65% of the total proceeds of such
fund is invested in the equity shares of domestic companies listed on a
recognised stock exchange,
and, for the purposes of this clause,—
( I )   the percentage of equity shareholding or unit held in respect of the fund,
shall be computed with reference to the annual average of the monthly
averages of the opening and closing figures;
( II )   in case of a scheme of an insurance company comprising unit linked
insurance policies to which exemption in Schedule II (Table: Sl. No. 2)
does not apply, the minimum requirement of 90% or 65%, as the case
may be, is required to be satisfied throughout the term of such insurance
policy.
C. — New tax regime
Tax on income of certain manufacturing domestic companies.
199.   (1) Irrespective of anything contained in this Act, but subject to the provisions
of Parts A, B, E and this Part (other than sections 200
71  
and 201) of this Chapter,
the income-tax payable in respect of the total income of a person, being a domestic
company, for any tax year, shall, at the option of such person, be computed at the
rate of 25% subject to the following conditions:—
( a )   the company has been set-up and registered on or after the 1st March,
2016;
( b )   the company is not engaged in any business other than the business of
manufacture or production of any article or thing and research in relation
to, or distribution of, such article or thing manufactured or produced by
it; and
( c )   the total income of the company has been computed,—
( i )   without any deduction under—
( A )   section 45(2) or 47(1)( b ); or
( B )   Chapter VIII-C, other than the provisions of section 146; or
( C )   sections specified in section 205(1)( a ) to ( g );
( ii )   without set off of any loss carried forward from any earlier tax year,
if such loss is attributable to any of the deductions referred to in
sub-clause ( i ).
(2) The loss referred to in sub-section (1)( c )( ii ) shall be deemed to have been given
full effect to and no further deduction for such loss shall be allowed for any sub -
sequent year.
(3) The provisions of this section shall not apply unless an option is exercised by
the person in the manner as may be prescribed on or before the due date specified
under section 263(1) for furnishing the first of the returns of income which such
person is required to furnish and such option once exercised, shall apply to subse -
quent tax years.

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(4) Once the option under sub-section (3) has been exercised for any tax year, it
cannot be subsequently withdrawn for the same or any other tax year, except where
the person exercises option under section 200.
Tax on income of certain domestic companies.
200.   (1) Irrespective of anything contained in this Act but subject to the provisions
of Parts A, B, E and this Part (other than sections 199 and 201) of this
Chapter, the income-tax payable for a tax year shall be at the rate of 22%, at the
option of a person being a domestic company, in respect of the total income of such
person computed in the following manner:—
( a )   without any deduction under—
( i )   section 45(2) or 47(1)( b ); or
( ii )   Chapter VIII other than provisions of section 146 or 148; or
( iii )   sections specified in section 205(1)( a ) to ( g );
( b )   without set off of any loss carried forward or depreciation from any
earlier tax year, if such loss or depreciation is attributable to any of the
deductions referred to in clause ( a );
( c )   without set off of any loss or allowance for unabsorbed depreciation
deemed so under section 116, if such loss or depreciation is attributable
to any of the deductions referred to in clause ( a ).
(2) Where the person fails to satisfy the requirements contained in sub-section (1)
in any tax year, the option shall become invalid in respect of the said tax year and
subsequent years and other provisions of the Act shall apply, as if the option had
not been exercised for such tax year and for subsequent years.
(3) The loss and depreciation referred to in sub-section (1)( b ) and ( c ) shall be
deemed to have been given full effect to and no further deduction for such loss or
depreciation shall be allowed for any subsequent year.
(4) In case of a person, having a Unit in the International Financial Services Centre,
which has exercised option under sub-section (5), the requirements contained in
sub-section (1) shall be modified to the extent that the deduction as referred to in
section 147 shall be available to such Unit subject to fulfilment of the conditions
contained in that section.
(5) The provisions of this section shall not apply unless the option is exercised by
the person in such manner as may be prescribed on or before the due date speci -
fied under section 263(1)for furnishing the return of income and such option once
exercised, shall apply to subsequent tax years.
(6) Once the option under this section has been exercised for any tax year, it shall
not be subsequently withdrawn for the same or any other tax year.
(7) In case of a person, being a domestic company, where the option exercised by
it under section 201, has been rendered invalid due to violation of the conditions
contained in section 205(2)( b ) or ( c ) or ( d ), such person may exercise the option
under this section.
Tax on income of new manufacturing domestic companies.
201.   (1) Irrespective of anything contained in this Act, but subject to the provisions
of Parts A, B, E and this Part (other than sections 199 and 200) of this Chapter, the

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income-tax payable in respect of the total income of an assessee, being a domestic
company, specified in column B of the Table below, shall, at the option of such as -
sessee, be computed at the rates specified in column C, if the conditions contained
in column D thereof are fulfilled.
TABLE
Sl.
No.
Assessee   Total income and
rate of tax
Conditions
A   B   C   D
1.   A domestic
company
engaged in
business of
manufac -
ture or pro -
duction of
any article
or thing.
( a )   15% on the total in -
come other than the
income mentioned in
clauses ( b ), ( c ) and
( d );
( b )   22%   (without   any
deduction or allow -
ance   in   respect   of
any expenditure or
allowance) on such
income,—
( i )   which has nei -
ther been de -
rived from nor
is incidental to
manufacturing
or production
of an article or
thing; and
( ii )   in   respect   of
which no spe -
cific   rate   of
tax   has   been
provided   sep -
arately   under
Parts A, B, E
and this Part of
this Chapter;
( c )   22% on short-term
capital   gains   de -
rived from transfer
of a capital asset on
which   no   depreci -
ation   is   allowable
under this Act;
( d )   30% on the income
deemed   so   under
section 205(4).
Such domestic company—
( a )   exercises   the   option   in
the   manner   provided   in
sub-section (2);
( b )   has been set-up and reg -
istered on or after the 1st
October, 2019;
( c )   has commenced manufac -
turing or production of an
article or thing on or before
the 31st March, 2024;
( d )   the total income of which
is   computed   as   per   the
provisions of sub-section
(3); and
( e )   fulfils all the conditions
provided in sub-section (5)
of this section and section
205(2).

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(2) The option under this section shall be exercised by the assessee in the manner
prescribed subject to the following conditions:—
( a )   it shall be exercised on or before the due date specified under section
263(1) for furnishing first of the returns of income for any tax year;
( b )   such option, once exercised, shall apply to subsequent tax years;
( c )   once the option has been exercised for any tax year, it shall not be sub -
sequently withdrawn for the same or any other tax year; and
( d )   where the assessee fails to fulfil the conditions contained in sub-section
(1) (Table: Sl. No. 1.D) in any tax year,—
( i )   the option shall become invalid in respect of such tax year and
subsequent tax years; and
( ii )   the other provisions of this Act shall apply, as if the option had not
been exercised for that tax year and subsequent tax years.
(3) For the purposes of sub-section (1), the total income of the assessee shall be
computed,—
( a )   without any deduction under—
( i )   section 45(2) or 47(1)( b ); or
( ii )   Chapter VIII other than section 146 or 148; or
( iii )   sections specified in section 205(1)( a ) to ( g );
( b )   without set off of any loss or allowance for unabsorbed depreciation
deemed so under section 116, if such loss or depreciation is attributable
to any of the deductions referred to in clause ( a ).
(4) While computing the income of the assessee, the loss and depreciation, or both,
as specified in sub-section (3)( b ) shall be deemed to have been given full effect to
and no further deduction for such loss or depreciation, or both, shall be allowed
for any subsequent year.
(5) In case of an amalgamation, option under this section shall remain valid in case
of the amalgamated company only and if the conditions contained in sub-section
(1) (Table: Sl. No. 1.D) are continued to be fulfilled by such company.
New tax regime for individuals, Hindu undivided family and others.
202.   (1) Irrespective of anything contained in this Act other than Chapter XVII-B
but subject to Parts A, B, E and this Part of this Chapter, the income-tax payable
by a person, being—
( a )   an individual; or
( b )   a Hindu undivided family; or
( c )   an association of persons (other than a co-operative society); or
( d )   a body of individuals, whether incorporated or not; or
( e )   an artificial juridical person referred to in section 2( 77 )( g ),
in respect of the total income for a tax year, shall, unless the person exercises the
option in the manner provided under sub-section (4), be computed at the rate of
tax given in the following Table:—

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TABLE
Sl. No.   Total income   Rate of tax
A   B   C
1.   Upto   `   400000   Nil
2.   From   `   400001 to   `   800000   5%
3.   From   `   800001 to   `   1200000   10%
4.   From   `   1200001 to   `   1600000   15%
5.   From   `   1600001 to   `   2000000   20%
6.   From   `   2000001 to   `   2400000   25%
7.   Above   `   2400000   30%
(2) For the purposes of sub-section (1), the total income of the assessee shall be
computed—
( a )   without any exemption or deduction under—
( i )   Schedule III (Table: Sl. No. 5 or 6 or 7 or 8 or 11 or 17);
( ii )   Schedule III (Table: Sl. No. 12 or 13) (other than those as may be
prescribed for this purpose);
( iii )  
25
[ *** ]
( iv )   section 19(1) (Table: Sl. No. 1);
( v )   section 22(1)( b ), in respect of properties referred to in section 21(6)
6
;
( vi )   section 33(8);
( vii )   section 48;
( viii )   section 49;
( ix )   section 45(3)( a ) or ( b ) or ( c );
( x )   section 46;
( xi )   section 47(1)( a ); and
( xii )   Chapter VIII other than the provisions of section 124(1) and 124(2),
or 125(2) or 146; and
( b )   without set off of—
( i )   any loss carried forward or depreciation from any earlier tax year,
if such loss or depreciation is attributable to any of the deductions
referred to in clause ( a ); or
( ii )   any loss under the head “Income from house property” with any
other head of income; and
25.   Omitted   by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its omission, sub-clause ( iii ) read
as under :
“( iii )   section 144;”