Income Tax (22nd Amendment) Rules 2020

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Income Tax (22nd Amendment) Rules 2020

The Central Board of Direct Taxes, vide notification dated 1st October 2020, introduced the Income Tax (22nd Amendment) Rules, 2020. The following amendment/ insertion has been undertaken to the Income Tax Rules, 1962-

  1. Amendment to rule 5,
  2. Insertion of new rule 21AG,
  3. Insertion of new rule 21AH,
  4. Amendment in Tax Audit Report (Form No. 3CD),
  5. Amendment in Tax Audit Report (Form No. 3CEB), and
  6. Amendment in Form ITR-6.

Notably, the above amendments are undertaken to give effect to the following new sections-

Sr. No. New Sections Applicability
1 Section 115BAA Applicable to the domestic company from Assessment year 2020-2021.
2 Section 115BAB Applicable to the domestic company from Assessment year 2020-2021.
3 Section 115BAC Applicable to an Individual and a Hindu Undivided Family from Assessment year 2021-2022.
4 Section 115BAD Applicable to a co-operative society from Assessment year 2021-2022.

The Income Tax (22nd Amendment) Rules, 2020 are briefly explained in the present article.

Amendments to rule 5 of the Income Tax Act, 1962

New proviso inserted which restricts depreciation of any block of assets to 40% on the written down value in the following cases-

  1. The domestic company claiming option of lower tax under section 115BA (4) or section 115BAA (5) or section 115BAB (7).
  2. An Individual or a Hindu Undivided Family claiming lower tax under section 115BAC (5).
  3. A Co-operative society resident in India exercising lower tax under section 115BAD (5).

Insertion of new rule 21AG to the Income Tax Rules, 1962

New rule 21AG states that an Individual or a Hindu Undivided Family shall exercise the option of lower tax, available under section 115BAC (5), by filing Form No. 10-IE. The same is applicable from Assessment Year 2021-2022.

The said Form No. 10-IE is to be filed electronically either via Digital Signature or via Electronic Verification Code.

Insertion of new rule 21AH to the Income Tax Rules, 1962

New rule 21AH states that from Assessment Year 2021-2022, the co-operative society resident in India shall exercise the option of lower tax, available under section 115BAD (5), by filing Form No. 10-IF.

The said Form No. 10-IF is to be filed electronically either via Digital Signature or via Electronic Verification Code.

Amendment in Tax Audit Report (Form No. 3CD)

Amendments relating to section 115BA, Section 115BAA and Section 115BAB is done in Part A and Part B of Form No. 3CD. The same is explained hereunder-

Changes undertaken in Part A of Form No. 3CD-

  • New serial no. 8a inserted relating to the assessee has to opted for taxation under section 115BA/ section 115BAA/ Section 115BAB.

Changes undertaken in Part B of Form No. 3CD-

  • New clause 18(ca) inserted-

The adjustment made to the written down value under section 115BAA is to be mentioned.

  • New clause 18(cb) inserted-

Here, adjusted written down value is to be mentioned.

  • Substituted clause 32(a) as under-

Details of brought forward losses/ depreciation allowance, in the following manner, to the extent available-

SI No. Assessment Year Nature of loss/allowance Amount as returned All losses/allowance not allowed under section 115BAA Amount adjusted by the withdrawal of additional depreciation on account of opting for taxation u/s 115BAA Amount as assessed Remarks
1 2 3 4 5 6 7 8

 However, it is important to note here that the assessee who has already filed a tax audit report is not required to revise the same.

 Amendment in Tax Audit Report (Form No. 3CEB)

Serial number 22, 23 and 24 are amendment in Part C of Form No. 3CEB as under-

  1. Serial Number 22 is omitted.
  2. Serial Number 23 is re-number as serial number 22.
  3. Serial Number 24 is re-number as serial number 23 and the same is also substituted.

Amendment in Form ITR-6

Schedule DPM, Schedule CFL and Schedule UD in Form ITR-6 is amended to incorporate adjustment of depreciation for assessee opting for taxation as per section 115BAA.

Notably, it should be noted here that the assessee who has already filed Form ITR-6 for the Assessment Year 2020-2021 is not required to revise the same.

Post by poonamgandhi

CA Poonam Gandhi is a Chartered Accountant and a Lawyer. With a wide practice experience and deep understanding of different laws and taxes, she has been an independent professional writer in the field of taxation, finance and laws.