The 22% tax rate under Section 115BAA looks like the simplest number in the corporate tax code — a flat rate a domestic company pays instead of the ordinary, higher slab. What is easy to miss is that it is not a rate you are handed; it is a rate you elect, and the election has a form, a deadline and a lock. The form is Form 10-IC. The deadline is the due date for filing your return of income. And the lock is permanent.
For a company with a 31 March 2026 year-end, that return due date for AY 2026-27 is 31 October 2026 in the ordinary audit case — a Saturday — and 30 November 2026 where the company has transfer-pricing obligations and files Form 3CEB. Form 10-IC has to be on the portal on or before that date. The Income Tax Department’s own guidance is blunt about the consequence: you file Form 10-IC “on or before the due date specified under sub-section (1) of Section 139 … to avail the benefit.” Miss the date, and the benefit is not there to claim.
What the 22% tax rate under Section 115BAA actually asks of you
Section 115BAA lets a domestic company pay tax at 22% (plus the applicable surcharge and cess) instead of the ordinary corporate rate — but only if it gives up a defined set of deductions and incentives and computes its income without them. Form 10-IC is simply how the company tells the Department it is making that trade. The department’s guidance describes the option as available “provided they do not avail specified deductions and incentives.”
The trade is the whole point of the section. In exchange for the flat 22%, the company forgoes the incentive-linked deductions — the kind that reward specific investments, locations or activities — and is taxed on the income that remains. For a company that was already claiming few of those, the lower flat rate is close to a free reduction. For one that leans on them, 22% can cost more than it saves. That is the calculation Form 10-IC commits you to, so it is worth running before you opt in, not after.
It also helps to read the headline number correctly. The 22% is the base rate; the applicable surcharge and cess sit on top of it, so the all-in figure a Section 115BAA company actually pays is a little above 22% — still below the ordinary rate for most companies, but worth modelling at the real, grossed-up number rather than the headline one when you weigh the two regimes. The comparison that decides it is your total liability under Section 115BAA against your total liability without it, each computed properly.
The deadline rides on your return, not on a date of its own
It is tempting to treat Form 10-IC as a bit of paperwork you can file whenever — but there is no separate, later window for it. The form’s deadline is the return’s deadline. If a company files its AY 2026-27 return on 31 October without a valid Form 10-IC already on record, the 22% option is simply not available on that return. This is exactly the kind of miss that surfaces later, at assessment, when the concessional rate a company assumed it had is denied because the form was filed late or not at all — and the year is then taxed at the ordinary, higher rate instead.
One decision you cannot reverse
The second thing Form 10-IC locks in is time. The Department’s guidance is equally plain: “if you have opted for concessional tax rates once, it shall apply to subsequent assessment years and cannot be withdrawn.” Section 115BAA is a one-way door. Form 10-IC is filed once, in the first year you opt in, and the choice it records then carries forward automatically to every year after — the company cannot step back to the ordinary rate to pick up a deduction in a later, investment-heavy year. That is fine for a stable, low-incentive business, and a real constraint for one expecting large deduction-linked spend ahead. The form is a one-time filing; the choice behind it is for good.
Because the choice is permanent, the first year is the one to get right. A company that is still scaling — and still likely to make deduction-linked investments — may be better served waiting until those claims taper before it locks into Section 115BAA, since the door opens once and does not reopen. A mature, steady business with little left to give up usually reaches the opposite answer. Neither is a default; both are a decision Form 10-IC records for keeps.
Before your AY 2026-27 return goes in
Three things are worth settling before the return is filed:
- Whether 22% actually beats your ordinary liability once the foregone deductions are added back — run both computations, not one.
- Whether this is your first year under Section 115BAA, in which case Form 10-IC must be filed — and filed on or before the return due date, not after it.
- Whether any CBDT extension has moved the AY 2026-27 return due date. The statutory date is 31 October 2026 for ordinary audit cases; check for a notification close to the deadline before relying on it.
None of this is difficult once it is on a checklist. The cost of getting it wrong is not a late fee — it is a full year taxed at the ordinary rate you were trying to leave, and, if you had planned your cash around 22%, a gap you did not budget for. The 22% rate is worth having. It is just worth claiming on purpose.