In a good news for business owners, Central Board of Direct Taxes, The CBDT has given some extra time to businesses to file an important form, which is required to take advantage of lower corporate taxes without the tax incentives that were introduced to them in 2019. This was applicable for income earned from 2020. According to a CBDT statement, the deadline for availing tax exemption of up to 22 per cent has now been extended till June 30 this year.
The form under consideration, Form 10-IC, is required to be filed only if a domestic company chooses to pay tax at the concessional rate of 22 per cent under section 115BAA. Income Tax Act, 1961, As per Section 115BAA of the Income Tax Act, domestic companies have the option to pay tax at a concessional rate of 22% (plus applicable surcharges and cesses), provided they do not avail of specified deductions and incentives. Companies can opt for the concessional rate from assessment year 2020-21 only if they file Form 10-IC within the stipulated time frame.
If the business exercises the option for one year, the rule will apply in subsequent years as well. Businesses need to fill the form in online mode only. The tax return for income earned in FY20 was to be filed on the assessment year beginning 1 April 2020 (AY2020-21).
However, it did not go as planned as many businesses have claimed the benefit of lower rates of tax returns and have not filed a separate electronic form in this regard. This has created complications.
“Failure to exercise such option in the prescribed form on or before the due date specified under section 139(i) of the Act shall result in denial of concessional rate of tax of twenty two per cent to such person,” the CBDT said. Said in a statement.
“The Board has received representations stating that Form 10-IC cannot be filed with return of income for AY 2020-21, which was the first year of filing this form. It is requested that the delay in filing Form I0-IC may be condoned,” it added.
The statement also said that in order to avoid genuine hardship to the domestic companies in exercising the option of tax rate concession, the tax authority has directed that the delay in filing Form 10-IC as per Rule 21AE of the Rules AY 2020 -21 for the relevant previous year is exempted in cases where the conditions are fulfilled.
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