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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding Companies

Under the Income-tax Act, 2025, a domestic company wants to be taxed at the concessional rate of 25% available to certain manufacturing companies set up on or after 1 March 2016. By when must it exercise the option?

The option must be exercised in the prescribed manner on or before the section 263(1) due date for the first return of income the company is required to furnish. It then applies to subsequent tax years, so a later assessment-stage option is not allowed.

  1. AOn or before the due date under section 263(1) for furnishing the first return of income it is required to furnishCorrect
  2. BWithin 30 days after the end of the tax year in which it commenced manufacturing
  3. CAt any time before the assessment is completed, and it may be withdrawn later
  4. DOn or before the due date of the return for the last year in which it claims the concessional rate

Explanation

Section 199(3) requires the option to be exercised on or before the due date under section 263(1) for furnishing the first of the returns of income. Once exercised it applies to later tax years. Waiting until assessment is wrong because the statute fixes the return due date as the deadline.

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