/ Tax Election Checklist · Updated 2026-10-22
Form 10-ID Section 115BAB Election Checklist India 2026 - BQP, 15% new manufacturing rate opt-in.
Form 10-ID election into Section 115BAB (15% concessional corporate tax for new manufacturing) is one-time irrevocable. Available only for new manufacturing company incorporated post Oct 2019 + commencing production by extended deadline. More restrictive than 115BAA but materially lower rate. Here's the complete 2026 eligibility + filing checklist.
DC
Written by CA Durgesh Chavda
Chartered Accountant (ICAI) · Founder, Bharat Quantum Prospera · US incorporation, India-US DTAA, FEMA ODI, NRI taxation, cross-border structuring · LinkedIn
/ Who qualifies for 115BAB
The strict conditions.
- Company incorporated on or after 1 October 2019.
- Commences manufacturing / production of article / thing on or before 31 March 2024 (extended for specific sectors - verify current state).
- Not formed by splitting up / reconstruction of existing business.
- Does not use plant and machinery previously used in India (second-hand > 20% threshold disqualifies).
- Does not use building previously used as hotel / convention centre.
- Engaged in manufacturing or production of article / thing. NOT in: electricity generation (specific exception), mining, book printing, re-labelling, software (controversial post 2022 clarifications).
- Related-party transactions at arm's-length pricing.
/ What 115BAB offers
The 15% rate.
- 15% corporate tax rate + 10% surcharge + 4% cess = effective 17.16%.
- No MAT applies.
- Materially lower than standard 25% or 22% or 115BAA 22% effective 25.17%.
- Available only during the specific manufacturing-sector window.
/ Forfeited deductions (similar to 115BAA)
What you give up.
- Section 10AA (SEZ unit deduction).
- Section 32(1)(iia) (additional depreciation).
- Section 32AD (investment allowance).
- Section 33AB / 33ABA (Tea/Coffee/Rubber / Site Restoration).
- Section 35 (scientific research - all sub-sections).
- Section 35AD (investment-linked).
- Section 35CCC / 35CCD.
- Chapter VI-A except 80JJAA and 80M.
- Carry-forward losses attributable to forfeited deductions.
/ Decision workflow
Before Form 10-ID.
- Confirm all conditions: post-Oct-2019 incorporation + manufacturing + commenced production by deadline + no reconstruction + no prior P&M + related-party at arm's-length.
- Compare 15% (17.16% effective) vs 22% (25.17% effective) vs standard 25%/30% - 115BAB wins for manufacturing by material margin.
- Check PLI eligibility (14 sectors) + state incentive stackability.
- Verify Section 10AA SEZ not planned (forfeited).
- Verify scientific research deduction not needed.
- Carry-forward loss analysis.
- File Form 10-ID with Indian ITR of first year of election.
- Decision irrevocable - verify before filing.
Last updated: 2026-10-22.
/ Ready when you are
New manufacturing company? Form 10-ID 15% rate opt-in.
Eligibility verification + 115BAB vs 115BAA comparison + PLI stackability + state incentive. BQP integrated.
FAQ
Common questions, answered.
What's the eligibility window for Section 115BAB?
Company incorporated post 1 October 2019 + commencing manufacturing/production by 31 March 2024 (extended for specific sectors - verify current state). Specific sectoral extensions may apply via Finance Act notifications. BQP eligibility verification standard scope.
Is software development eligible for 115BAB?
Controversial. Original intent was physical manufacturing (article or thing). CBDT clarifications 2022+ suggest software development is NOT 'manufacturing' for 115BAB purposes. Specific sub-activities (hardware, embedded systems with substantial hardware component) may qualify. Pure SaaS = services (115BAA 22%, not 115BAB).
Can SEZ-based new manufacturing company opt into 115BAB?
Technically yes - no SEZ exclusion. But 115BAB forfeits Section 10AA SEZ deduction. If SEZ 10AA tax holiday is active, must model: 10AA 100% tax-free profit for 5 years + 50% for next 5 vs 115BAB 15% rate. Typically 115BAB wins for post-10AA-holiday mature profit stream.
Can 115BAB be combined with PLI scheme?
Yes - 115BAB is Income Tax provision; PLI is cash incentive on incremental sales. Both apply simultaneously. Combined with state industrial policy incentives (Gujarat, Tamil Nadu, Karnataka, Maharashtra) - total subsidy stack can reach 15-30% capex + 7-8% recurring tax saving.
What if conditions are violated after 115BAB opt-in?
If any 115BAB condition is violated in subsequent year (e.g., reconstruction, prior P&M, related-party non-arm's-length), 115BAB benefit lost from that year + all subsequent years. Falls back to standard regime (not 115BAA). Material downside - condition monitoring critical.
Does BQP handle 115BAB eligibility + Form 10-ID filing + PLI integration?
Yes - specialist manufacturing / cleantech / EV / battery / semiconductor practice. Eligibility verification + 5-year tax projection + Form 10-ID filing + PLI application + state incentive negotiation + ongoing compliance monitoring. Standard engagement for strategic manufacturing investments. WhatsApp +91 78018 87130.
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