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Section 115BAE – New concessional tax rate for New manufacturing Co-operative societies

section 115BAE
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In the Finance Bill 2023, a new section 115BAE has been proposed to be inserted providing the concessional tax regime to new manufacturing co-operative societies. The taxation rate shall be 15%.

The conditions for section 115BAE shall be similar to the conditions applicable to the New Manufacturing Companies, which are as follows :-

  1. The Co-operative society has been set up and registered on or after 1-10-2019 and has commenced manufacturing or production of an article or thing on or before 31-03-2024 and
  • The business is not formed by splitting up or reconstruction of a business already in existence.
  • Does not use any machinery or plant previously used for any purpose.

Explanation 1.—For the purposes of sub-clause (ii), any machinery or plant which was used outside India by any other person shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely:—

(A) such machinery or plant was not, at any time previous to the date of the installation used in India;

(B) such machinery or plant is imported into India from any country outside India; and

(C) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of machinery or plant by the person.

Explanation 2.—Where in the case of a person, any machinery or plant or any part thereof previously used for any purpose is put to use by the Co-operative society and the total value of such machinery or plant or part thereof does not exceed twenty per cent of the total value of the machinery or plant used by the Co-operative society, then, for the purposes of sub-clause (ii) of this clause, the condition specified therein shall be deemed to have been complied with;


  1. The Co-operative society is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to, or distribution of, such article or thing manufactured or produced by it.

Explanation.—For the removal of doubts, it is hereby clarified that the business of manufacture or production of any article or thing referred to in clause (b) shall not include business of,—

(i)  development of computer software in any form or in any media;

(ii)  mining;

(iii) conversion of marble blocks or similar items into slabs;

(iv) bottling of gas into cylinder;

(v)  printing of books or production of cinematograph film; or

(vi) any other business as may be notified by the Central Government in this behalf; and’


  1. The total income of the Co-operative society has been computed –

(i) without any deduction under the provisions of section 10AA or clause (iia) of sub-section (1) of section 32 or section 33AB or section 33ABA or subclause (ii) or sub-clause (iia) or sub-clause (iii) of subsection (1) or sub-section (2AA) of section 35 or section 35AD or section 35CCC or under any of the provisions of Chapter VI-A other than the provisions of section 80JJAA;

(ii) without set off of any loss carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); and

(iii) by claiming the depreciation, if any, under section 32, other than clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed.


The loss and depreciation referred to in sub-clause (ii) of clause (c) of sub-section (2) shall be deemed to have been given full effect to and no further deduction for such loss shall be allowed for any subsequent year.

Computing profit where there is close connection between the Co-operative society and any other person – Where it appears to the Assessing Officer that, owing to the close connection between the assessee to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such business, the Assessing Officer shall, in computing the profits and gains of such business for the purposes of this section, take the amount of profits as may be reasonably deemed to have been derived therefrom.

It is also proposed to insert a new clause (vb) in the section 92BA of the Act to include the transaction between the Co-operative society and the other person with close connection within the purview of “specified domestic transaction”.

The Co-operative society shall have to exercise this option on or before the due date of furnishing the return u/s. 139(1) of the Act for furnishing the first return of income for any previous year relevant to the assessment year commencing on or after 1st April 2024 and such option once exercised shall apply to subsequent assessment years.

These amendments shall apply with effect from 1st April 2024 and shall accordingly, apply in relation to the AY 2024-25 and subsequent assessment years.









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