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Soumya Bajpai
| Updated: 07 Dec, 2020 | Category: Income Tax

Things you Must Know all about Form 10-IB in Income Tax

Form 10 IB in Income Tax
Reading Time: 3 minutes

The Central Board of Direct Taxes issued Form 10-IB for Start-Ups allowing them to choose for a more economical tax rate. The notification supplements Rule 21AD to the Income Tax laws that provide for an application of option under sub-section 115BA (4) of Income Tax Act.

This can be mention in Form No. 10-IB such as a report declaring the right to use the requirements under sub-section (4) of section 115BA by a private company for any preceding year related to the estimation year starting on or after the 1st April 2017.

Taxation (Amendment) Ordinance Act, 2019

Section 115BAA, Section 115BAB were inserted in Income Tax Act, 1961, by the Finance Minister[1] in the Union Budget 2020.

  • These sections are inserted in order to give the benefit of a reduced tax rate of domestic companies.
  • While all existing domestic companies have been provided an option to pay tax at the concessional rate of 22%, new domestic companies set up on or after 1st Oct 2019, and commencing manufacturing before 31st Mar 2023 would have an option to pay tax at 15%.
  • However, a reduced tax rate comes with the consequential surrender of specified deductions and incentives. No minimum alternate tax (MAT) will be applicable in either of the options. Companies which do not opt for a concessional tax rate shall continue to enjoy the benefit of such specified deductions/incentives, be subject to MAT at 15%.

Read our article:New Income Tax Returns Forms: CBDT Notified FY 2019-20/ AY 2020-21

Section 115BA (Existing amended provisions)

Section 115BA (Existing amended provisions)

What is Form 10-IB in Income Tax?

Form 10-IB must contain the Information about the choice to apply under terms of sub-section (4) of division 115BA of Income Tax Act. It also relates to the assessment year commencing on or after the 1st day of April 2017, which must be mentioned in Form No. 10-IB.

When one should File Form 10?

Under Section 12A Income-tax Act, 1961, Form 10 is produce regarding an appeal for an enrollment of the generous or moral trust of company. Therefore, one can register online in Form 10 by simply attending the E-filing website of an income tax department.

Income-tax (9th Amendment) Rules, 2017

The power conferred by section 295 read with section 115BA of the Income-tax Act, 1961, Central Board of Direct Taxes makes the following rules to amend further the Income-tax Rules, 1962, namely: –

  • In Income-tax Rules, 1962 (hereafter referred to as the principal rules), after rule 21AC, the following rule has been inserted as follows:

“21AD states that- Exercise of option under sub-section (4) of section 115BA. The option to be exercised by a company in accordance with the provisions of sub-section (4) of section 115BA for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2017, has to mention details in Form No. 10-IB.

  • The option in the Form No. 10-IB referred to in sub-rule (1) must be furnished electronically either under electronic verification code or digital signature.
  • A Principal Director General of Income-tax System or Director General of Income-tax System must‑
  1. Specify a procedure for filing of Form referred in sub-rule (2)
  2. Specify data structure, standards and manner of generation of electronic verification code, referred in sub-rule(2), for purpose of verification of a person furnishing the form referred to in the said sub- rule.
  3. Be responsible for formulating & implementing appropriate security, archival & retrieval policies in the Form so furnished.

Draft of Form No. 10-IB

FORM No. 10-IB

[Rule 21AD, Sub-Rule (1)]

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

To,

Assessing Officer,

Madam/Sir,

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

2. The details of the company are mention below

  • Name of the Company exercising the option under of section 115BA sub-section (4):
  • Whether this is the Domestic company or not :
  • PAN number:
  • Registered Address :
  • Date of an Incorporation :
  • Nature of the business or activities of the Company:

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

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

Place…………..

Date……………

Yours faithfully,

Signature of Principal Officer…………………

Name……………………………………

Designation ………………………….

Address………………………………..

Conclusion

Under section 115BA, every domestic company has the option of paying income tax on fulfilment of certain conditions. The company willing to opt for such rate of tax is required to exercise such option in the prescribed manner on and before the due date for furnishing of its return of income under section 139(1).

Read our article:10 Reasons Why Filing Income Tax Return Is Vital For You

Soumya Bajpai

Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.

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