Section 115BAA

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Sanatan (Querist)
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30 May 2023 Our company Turn over Rs 1.00 Cr FY 22-23 Previous year Rs 1.15 Cr. Profit during the year Rs 4.85 Lakh. Carry forwarded Losses Rs 2.05 Cr and unabsorbed Depn Rs 30.40 Lakh. Now our questions are
1. Can we set off carry forwarded losses with current year profit if adopted new tax regime u/s 115BAA ?
2. Can we utilised unabsorbed Depn current year profit if adopted new tax regime u/s 115BAA ?
3. If we continue old regime carry forwarded losses to be set off on normal tax rate e.i.25%+Cess.
4. If we continue old regime carry forwarded losses or unabsorbed Depn which is utilised on Mat Tax Rate i.e 15%+ Cess.

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Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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11 July 2024 Based on the information provided, here are the answers to your questions regarding setting off of losses and unabsorbed depreciation under different tax regimes:

1. **Setting off Carry Forwarded Losses under Section 115BAA (New Tax Regime):**
- Under Section 115BAA, which pertains to the new tax regime (lower corporate tax rate regime), there is no provision to set off brought forward losses against current year profits. This regime offers a lower tax rate but restricts the set-off of losses and depreciation.
- Therefore, if you opt for the new tax regime under Section 115BAA, you cannot set off the carried forward losses against the current year's profit.

2. **Utilization of Unabsorbed Depreciation under Section 115BAA (New Tax Regime):**
- Similar to losses, under Section 115BAA, you cannot utilize the unabsorbed depreciation brought forward from previous years against the current year's profit.
- The new tax regime aims to simplify taxation with a lower rate but limits the use of deductions and allowances.

3. **Setting off Carry Forwarded Losses under the Old Tax Regime:**
- If you continue with the old tax regime, which includes the normal tax rates (currently 25% plus cess), you can set off the carried forward losses against the current year's profit.
- This allows you to reduce your taxable income under the regular corporate tax rate.

4. **Utilization of Carry Forwarded Losses or Unabsorbed Depreciation under MAT (Minimum Alternate Tax) Regime:**
- Under the old regime, if you opt to pay tax under the MAT provisions (15% plus cess on book profit), you can still utilize the brought forward losses and unabsorbed depreciation.
- The MAT regime applies when the tax payable as per regular provisions is lower than the tax computed under MAT.

In summary:
- **New Tax Regime (Section 115BAA):** No set-off of losses or unabsorbed depreciation against current year's profit.
- **Old Tax Regime:** Allows set-off of losses against current year's profit at normal corporate tax rates (25% plus cess) and utilization of unabsorbed depreciation.
- **MAT Regime:** Allows utilization of losses and unabsorbed depreciation against book profits taxed at 15% plus cess, if applicable.

It's essential to evaluate your company's financial situation and tax planning objectives to decide whether to continue with the new or old tax regime based on these considerations. Consulting with a tax advisor or CA will provide further clarity and help in making an informed decision.

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