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CBDT Notifies Form 10-IB to opt for lower rate of tax by Companies

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The Finance Act 2016 had inserted a new provision for domestic companies to pay tax @ 25% by inserting Section 115BA. Tax on income of certain domestic companies. Under this section a domestic company is given the option to pay tax @ 25% on income earned starting from 2016-17 .

The important point to bear in mind is such option if exercised should be made before first return of income is filed and once exercised it cannot be revoked.

Conditions to be satisfied for claiming the benefit of this section :

  1. The company has been set-up and registered on or after the 1st day of March, 2016
  2. The company should be engaged in business of manufacture or production and nothing else. (Research and distribution of product manufactured is allowed. The original Finance Bill tabled in parliament did not contain such condition. It was subsequently added by the Lok Sabha before passing it on 05-05-2016)
  3. The total income has been computed
    1. without any deduction section 10AA dealing with newly established units in SEZ,
    2. without deduction under S.32(1)(iia) dealing with additional depreciation @ 20%,
    3. without deduction under S. 32AC, 32AD dealing with deduction for investment in new plant and machinery
    4. without deduction under S. 33AB, 33ABA dealing with development account and restoration fund
    5. without deduction under S. 35 for expenditure on scientific research
    6. without deduction under S. 35AD, 35AD, 35CCC, 35CCD or
    7. without deduction under Chap VIA. Deductions in respect of certain incomes other than 80JJA
  4. Carry forward and set off of loss attributable to above deductions is not allowed
  5. Depreciation is calculated and allowed under section 32
  6. The loss on account of deduction given in Sl. No 3 shall stand forfeited once this section is exercised
  7. Such option should be exercised before due date of filing first return of income. This means the option is available only at the time when first income tax return is filed. If the option is not exercised then it cannot be claimed later on.
  8. Once the option has been exercised it cannot be subsequently withdrawn thus making it an irrevocable choice. (The original Finance Bill tabled in parliament did not contain such condition. It was subsequently added by the Lok Sabha before passing it on 05-05-2016)

The CBDT has vide NOTIFICATION NO 3636/2017  has amended Income Tax Rules by inserting Rule 21AD and Form 10IB on 02-05-2017. Form 10-IB is the form to exercise the option under section 115BA for lower rate of tax.

The form has to be  furnished electronically either under digital signature or electronic verification code

FORM 10-IB as notified is given below

 

FORM No. 10-IB

[See sub-rule (1) of rule 21AD]

Application for exercise of option under sub-section (4) of section 115BA of the Income-tax Act, 1961

To,

The Assessing Officer,

. . . . . . . . . . . . . . . . . . . .

Sir/Madam,

I. . . . . . . . . . . . . . . . . . . . ., on behalf of [name and registered address of the company exercising the option under sub-section (4) of section 115BA] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . having Permanent Account Number (PAN). . . . . . . . . . . . . . . . . . . .. do hereby exercise the option referred to in sub-section (4) of section 115BA of the Income-tax Act, 1961 (the Act) for previous year 20. . . -. . . and subsequent years.

2. The details of the company is given below

(i) Name of the Company exercising the option under sub-section (4) of section 115BA :
(ii) Whether it is a Domestic company or not :
(iii) PAN :
(iv) Registered Address :
(v) Date of Incorporation :
(vi) Nature of business or activities of the Company :

3. I understand that the above option once exercised for any previous year, cannot be subsequently withdrawn for the same or any other previous year.

4. I do hereby further affirm that the conditions stipulated in section 115BA of the Act are and shall be satisfied by the aforesaid company.

Place:

Date:

Yours faithfully,

Signature of Principal Officer. . . . . . . . . . . . . . . . . . . .

Name. . . . . . . . . . . . . . . . . . . .

Designation. . . . . . . . . . . . . . . . . . . .

Address. . . . . . . . . . . . . . . . . . .

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