To build globally competitive manufacturing environment, a concessional tax regime of 15% taxation was introduced by the Government for newly incorporated domestic manufacturing companies upto 31/03/2023. To continue the incentive under concessional tax regime, amendments proposed in Section 115BAB to extend the timeline by 1 more year upto 31/03/2024, for commencement of manufacturing or production to cover delays that may have caused by covid 19 pandemic and restrictions, vide vide Clause 26 of the Finance Bill 2022 (budget 2022-23):
1. Section 115BAB of the Income-tax Act provides for an option of concessional rate of taxation @ 15 % for new domestic manufacturing companies provided that they do not avail of any specified incentives or deductions and fulfil certain other conditions.
2. Sub-section (2) of section 115BAB of the Act contains the conditions required to be fulfilled by such companies. Clause (a) of said sub-section (2) provides that the new domestic manufacturing company is required to be set up and registered on or after 01.10.2019, and is required to commence manufacturing or production of an article or thing on or before 31st March, 2023.
3. The intent of the introduction of section 115BAB was to attract investment, create jobs and trigger overall economic growth. However, the cumulative impact of the persistence of the COVID-19 pandemic has resulted in some delay in setting up/ registration of new domestic companies and the commencement of manufacturing or production by such companies, if they have been set up and registered.
4. In order to provide relief to such companies, it is proposed to amend section 115BAB so as to extend the date of commencement of manufacturing or production of an article or thing, from 31st March, 2023 to 31st March, 2024.
5. This amendment will take effect from 1st April, 2022 and will accordingly apply in relation to the assessment year 2022-23 and subsequent assessment years. 71975