Both regimes were introduced in 2019 to bring Indian corporate tax in line with global rates. Once opted, neither can be reversed in any subsequent year. Choosing the wrong one — or missing the deadline — locks the company into a higher effective rate.
| Attribute | 115BAA | 115BAB |
|---|---|---|
| Base tax rate | 22% | 15% |
| Surcharge | 10% | 10% |
| Cess | 4% | 4% |
| Effective rate | 25.17% | 17.16% |
| Eligibility | Any domestic company | New manufacturing co. set up & registered on/after 01-Oct-2019 |
| Manufacturing start deadline | N/A | On or before 31-Mar-2028 (post Budget 2026) |
| Allowed deductions | Most Chapter VI-A deductions disallowed | Even more restricted |
| MAT | Not applicable | Not applicable |
| Brought-forward losses | Cannot use additional-depreciation loss | Limited |
| Reversal | Irreversible once opted | Irreversible; failure of conditions → 22% |
Our recommendation
Choose 115BAA for any existing or new services company. Choose 115BAB only if you are genuinely setting up a new manufacturing unit with separate plant & machinery (not transferred from a prior business beyond 20% of total). For service-export companies, 115BAA + a foreign-tax-credit setup typically wins.
FAQs
When must I opt in?
By filing Form 10-IC (115BAA) or Form 10-ID (115BAB) on or before the ITR due date for the first year you want the regime. Filing even one day late forfeits the option for that year and all subsequent years.
Does 115BAB cover software product companies?
Generally no — manufacturing under 115BAB means physical articles or things. Software development is treated as services and would fall under 115BAA.
Last updated: 22 Apr 2026