As per Income Tax Act, if a domestic company has exercised the option of Sec. ............., the provisions of minimum alternative tax U/s 115JB are not applicable.

The correct answer is - 115 BAA

Key Points

• Section 115 BAA
  • Introduced under the Income Tax Act, Section 115 BAA provides domestic companies the option to pay tax at a concessional rate of 22% (plus applicable surcharge and cess) without claiming certain deductions.
  • If a domestic company opts for taxation under Section 115 BAA, the provisions of Minimum Alternative Tax (MAT) under Section 115JB do not apply.
  • This section aims to simplify the tax structure and reduce the tax burden for eligible companies while ensuring they forego specific deductions such as those under Section 10AA or Chapter VI-A deductions.
  • It is applicable to companies that are not opting for exemptions or incentives under other sections.

Additional Information

• Minimum Alternative Tax (MAT)
  • MAT is applicable under Section 115JB and ensures companies with low taxable income due to exemptions/deductions still pay a minimum tax.
  • The MAT rate is typically 15% of the book profit (plus surcharge and cess).
  • However, companies opting for Section 115 BAA or Section 115 BAB are exempt from MAT provisions.
• Section 115 BAB
  • Introduced for new manufacturing companies, Section 115 BAB allows taxation at a concessional rate of 15% (plus surcharge and cess).
  • Like Section 115 BAA, companies under Section 115 BAB are also exempt from MAT provisions.
• Eligibility for Section 115 BAA
  • Available to domestic companies that do not claim incentives/exemptions such as SEZ benefits (Section 10AA) or additional depreciation.
  • Companies must comply with conditions specified under the section to avail of the concessional tax rate.