FAQ’s of LLP Settlement Scheme-2020

Client: – Period of Scheme
HSA: – The scheme is expected to commence from 16th March 2020 to 13th June 2020 i.e. for 90 days
Client: -Which all forms are allowed to file under the scheme?
HSA: -All Pending (as on 31st October 2019), Form-3, Form-4, Details of LLP and Partners and Form-8 and Form-11 for Annual filling.
Client: -How much Penalty to be levied by MCA?
HSA: -Every delayed form/Documents filling may be done by paying reduced penalty of Rs. 10 per day, maximum fees up to Rs. 5000 per form/documents.

For More Details Kindly refer MCA Circular http://www.mca.gov.in/Ministry/pdf/GeneralCircular06_04032020.pdf

New Corporate tax rate for new manufacturing companies- Section 115BAB

The Central government has introduced a new corporate tax rate for new manufacturing companies. The new section 115BAB inserted vide Ordinance, passed on 20 September 2019 proposing a low Corporate tax rate @ 15% (plus surcharge and cess) to new manufacturing companies.

Any new manufacturing company can avail this option to be taxed under section 115BAB. The company has to avail the option on or before the due date of filing income tax returns i.e usually 30th September of the assessment year. Once the company opts for section 115BAB in a particular financial year, it cannot be withdrawn subsequently.

The benefit is available from the financial year 2019-20 (AY 2020-21)

  1. Type of companies to be covered under section 115BAB

Any domestic company fulfilling conditions specified as followsmay becovered to claim the benefit under section 115BAB.

  1. Companies mainly includes a company formed and registered in India.
  2. The company has been set up and registered on or after 1 October 2019 and has commenced manufacturing on or before 31 March 2023. Such a company should:
    1. Not be formed by the splitting up and reconstruction of a business already in existence except in case of a business re-established under section 33B
    2. Does not use any plant or machinery previously used for any purpose. However, the company can use plant and machinery used outside India and used in India for the first time. Also, the company can use old plant and machinery, the value of which does not exceed 20% of the total value of the plant and machinery used by the company.
    3. Does not use a building previously used as a hotel or a convention centre.‘Hotel’ means a hotel of two-star, three-star or four-star category as classified by the Central Government. ‘Convention centre’ means a building of a prescribed area comprising of convention halls to be used for the purpose of holding conferences and seminars, being of such size and number and having such other facilities and amenities, as may be prescribed
  3. The company should be engaged in the business of manufacture or production of any article or thing, and research in relation to such article or thing. The company can also be engaged in the distribution of such article or thing manufactured or produced by it.
  4. The total income of the company should be calculated without claiming tax exemptions and incentives:
    1. Deduction under section 10AA for units in Special Economic Zone
    2. Deduction for additional depreciation under section 32 and investment allowance under section 32AD towards new plant and machinery made in notified backward areas in the states of Andhra Pradesh, Bihar, Telangana, and West Bengal
    3. Deduction under section 33AB for tea, coffee and rubber manufacturing companies
    4. Deduction towards deposits made towards site restoration fund under section 33ABA by companies engaged in extraction or production of petroleum or natural gas or both in India
    5. Deduction for expenditure made for scientific research under section 35
    6. Deduction for the capital expenditure incurred by any specified business under section 35AD
    7. Deduction for the expenditure incurred on an agriculture extension project under section 35CCC or on skill development project under section 35CCD
    8. Deduction under Chapter VI-A in respect to certain incomes, which are allowed under section 80IA, 80IAB, 80IAC, 80IB and so on, except deduction under section 80JJAA
    9. Set-off of any loss carried forward from earlier years if such losses were incurred in respect of the aforementioned deductions
    10. Deduction for depreciation under section 32, except the additional depreciation as mentioned above
Exemplary Corporate Tax liability Calculation as per section 115BAB
Sr. No. Particular Rates
1. Base tax rate 15%
2. Surcharge 10%
3. Cess 4%
4. Effective tax rate 17.16%

Any domestic company fulfilling conditions specified as follows may be covered to claim the benefit under section 115BAB.