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Under New Section 115BAB

21 September 2019

If an existing Partnership firm is creating a new manufacturing unit in different address, can claim the benefit of paying only 15% tax rate of Section 115BAB by only converting that part into a new set up company?

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5 Replies

Kapadia Pravin (17259 Points)
Replied 21 September 2019

Note that 115BAB - 15% tax rate Wala new section is not applicable to Partnership Firm.

New unit should be a company incorporated under Companies Act on or after 1-10-2019 plus there are other conditions to be complied with.

plz read all provisions thoroughly and then decide.

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Miss Mansi Bhojani (Practicing Chartered Accountant) (1736 Points)
Replied 22 September 2019

Manufacturing companies set up after 1.10.19 to get tax rate at 15% effective rate 17.01%. According to reading and my view says that conversion is not newly incorporated domestic company as per the requirement.

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Suresh Thiyagarajan (Student) (3986 Points)
Replied 22 September 2019

1. The new provision will be applicable only for Companies setting up manufacturing unit on or after 01.10.2019 and commences production before 31.03.2023.
2. The tax rate would be 15% and effectively it will be 17.01% provided no exemption or incentive.
3. They are also excluded from the payment of MAT.
4. In your case it is a partnership firm and converting it into a company would not be considered as a new domestic company. Hence, 15% tax rate will not be applicable in your case.
Please correct me if the above solution has an alternative view.