Section 200 - Tax on income of certain domestic companies
The 22% headline rate must be compared with foregone deductions, MAT consequences, loss write-offs and surcharge/cess. The option is generally irrevocable.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current law and effective date
Section 200 is controlled against the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026; earlier years and saved proceedings require the repeal-and-savings framework rather than automatic migration.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
The 22% headline rate must be compared with foregone deductions, MAT consequences, loss write-offs and surcharge/cess. The option is generally irrevocable.
Who should use this section
Domestic companies considering or continuing the optional 22% regime after modelling foregone deductions, losses, depreciation and continuing-condition consequences.
Old-law bridge
section 115BAA
The old-law bridge is navigational, not automatic precedent transfer. Match the 1961 Act wording, saved proceedings, current 2025 Act text and effective date before importing an older interpretation.
Finance Act 2026 / current-law note
No section-specific Finance Act, 2026 textual substitution is separately flagged for section 200; the consolidated post-Finance-Act-2026 text remains the controlling version and must be used instead of pre-1 April 2026 extracts.
Professional alert
Model effective tax including surcharge and cess. Reconcile every barred deduction and related loss/depreciation. Maintain annual condition compliance after option.
Connected Income-tax Rules, 2026 and Forms
| Rule | Current control | Form |
|---|---|---|
| Rule 25 | Depreciation rule interacts with the optional domestic-company regime and loss/depreciation write-off mechanics | - |
Worked application
A domestic company with substantial unabsorbed additional depreciation compares normal tax with section 200. On opting, the attributable balance is deemed fully absorbed and cannot be revived later.
Evidence / compliance checklist
- Model effective tax including surcharge and cess (section 200 evidence control 1).
- Reconcile every barred deduction and related loss/depreciation (section 200 evidence control 2).
- Maintain annual condition compliance after option (section 200 evidence control 3).
- Archive the prescribed Rule/Form output for section 200 together with the acknowledgement, filing date and underlying computation.
Common mistake
A common section 200 error is to apply the old-law label or headline rate without rebuilding the current statutory conditions. For “Tax on income of certain domestic companies”, the safer control is to test the exact taxpayer/transaction facts, the operative tax year, every linked Rule/Form and the Finance Act 2026 consolidated wording. Model effective tax including surcharge and cess. Reconcile every barred deduction and related loss/depreciation. Maintain annual condition compliance after option.
Recommended approach
For section 200, start with the legal trigger in “Tax on income of certain domestic companies”, document the evidence for that trigger, then run the computation or procedural step against the current text. As a cross-check, verify this provision-specific checkpoint: Optional domestic-company headline rate: 22%, subject to the statutory computation exclusions and continuing conditions.
Thresholds, periods and timing checkpoints
- Optional domestic-company headline rate: 22%, subject to the statutory computation exclusions and continuing conditions.
Related provisions and interaction map
Section 200 operates inside Chapter XIII special-rate computation; reconcile its particular tax bucket with the relevant capital-gains, unexplained-income or corporate-regime rules, plus surcharge, cess, return and loss-set-off provisions.
Provision summary - verify verbatim text in the official Act
Text-status note: This guide does not reproduce the complete verbatim provision for section 200. Use the linked official consolidated Act before quoting sub-section language or preparing a filing, opinion or litigation document.
Primary-source trail
Statute: Income-tax Act, 2025 as amended by Finance Act, 2026
Rules: Income-tax Rules, 2026
Law navigation: Income Tax Department 2025 Act / Rules hub
Quoting note: Use the official consolidated Act for verbatim legislative language.
FAQs
Does an old Income-tax Act, 1961 case automatically decide section 200?
No. The old-law bridge helps research, but transferability depends on materially matching language, transition rules and any Finance Act 2026 change.
Which text should be quoted in advice or litigation?
Quote the consolidated official statute for the relevant tax year. If this page presents a provision summary rather than complete statutory text, use the official consolidated Act for verbatim legislative language.