The Central Board of Direct Taxes (CBDT) has recently notified new income tax rule 21AHA to allow cooperative societies opt for the concessional tax regime under Section 115BAE of the Income Tax Act. Here are the key highlights of these new rules:
Overview of Section 115BAE
i) Section 115BAE allows certain new domestic manufacturing companies to opt for a concessional corporate tax rate of 15%
ii) This was introduced in 2019 to promote Make in India and boost domestic manufacturing
iii) Budget 2023 extended this benefit to cooperative societies as well
Key Aspects of the New Rules
Eligibility for Opting In
i) The new rules allow cooperative societies engaged in manufacturing or production of goods to opt for the 15% tax rate
ii) The rules apply from AY 2024-25 onwards
Procedure to Opt In
i) Cooperative societies have to file new IT Form 10-IFA to opt for the concessional rate
ii) The form must be filed electronically before the due date of filing the tax return
iii) Once exercised, the option cannot be withdrawn for that or any subsequent year
Conditions for Availing Concessional Rate
i) The cooperative society should be engaged only in manufacturing or production, and related research or distribution
ii) It should not be formed by splitting up or reconstructing an existing business
iii) It can use machinery and plants previously used only under exceptions given under Section 115BAE
Other Provisions
i) The new rules also specify the procedure and format for filing Form 10-IFA
ii) The IT Department will notify the detailed process and standards for e-filing the form
Conclusion
The concessional tax regime under Section 115BAE has now been extended to cooperative societies as well, through these new rules. This can make the cooperative sector more competitive and provide impetus to Make in India. However, cooperative societies will need to satisfy all the required conditions to avail this concessional rate and to evaluate whether ‘opting for the lower rate’ makes sense after considering the ‘loss of sacrificing other tax exemptions’.
CBDT Income Tax Notification 83/2023 dated 29/09/2023: New IT Rule 21AHA for Opting Concessional Tax Regime by Cooperative Societies