Section 115BAB → Section 116
Tax on income of new manufacturing domestic companies (15% Regime)
Quick Answer
Section 115BAB of the Income Tax Act, 1961 (Tax on income of new manufacturing domestic companies (15% Regime)) corresponds to Section 116 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 115BAB
The starting point is Section 115BAB of the Income Tax Act, 1961 — tax on income of new manufacturing domestic companies (15% regime). Allows newly set up domestic manufacturing companies to pay tax at a highly concessional rate of 15% to boost 'Make in India'.
From 1st April 2026, the same subject sits at Section 116 of the Income-tax Act, 2025 — retained and renumbered as Section 116 of the Income-tax Act, 2025. Sunset date for commencing manufacturing is strictly monitored. Only companies that started production before the specified cutoff can avail this.
For Section 115BAB, the practical impact is rated High. Major driver for foreign companies setting up factories in India.
Sec 115BAB
Provision Summary
Allows newly set up domestic manufacturing companies to pay tax at a highly concessional rate of 15% to boost 'Make in India'.
Sec 116
Provision Summary
Sunset date for commencing manufacturing is strictly monitored. Only companies that started production before the specified cutoff can avail this.
Key Changes & Highlights
- Stringent checks added to ensure old plant/machinery is not used to create a 'fake' new company just to claim the 15% rate.
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Frequently Asked Questions
What is Section 115BAB of the Income Tax Act, 1961 about?
Section 115BAB of the Income Tax Act, 1961 covers tax on income of new manufacturing domestic companies (15% regime). Allows newly set up domestic manufacturing companies to pay tax at a highly concessional rate of 15% to boost 'Make in India'.
Which section replaces Section 115BAB in the Income-tax Act, 2025?
Section 115BAB of the Income Tax Act, 1961 maps to Section 116 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Sunset date for commencing manufacturing is strictly monitored. Only companies that started production before the specified cutoff can avail this.
What is the impact of the change to Section 115BAB under the new tax code?
The transition impact for Section 115BAB is rated High. Major driver for foreign companies setting up factories in India.
What should I watch out for when Section 115BAB moves to the 2025 code?
Stringent checks added to ensure old plant/machinery is not used to create a 'fake' new company just to claim the 15% rate. These points are specific to Section 115BAB (Tax on income of new manufacturing domestic companies (15% Regime)).
Disclaimer: This mapping of Section 115BAB (Tax on income of new manufacturing domestic companies (15% Regime)) to Section 116 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 115BAB is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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