Income Tax 4th Amendment Rules

Income Tax 4th Amendment Rules 2020

Income Tax 4th Amendment Rules 2020

The CBDT(Central Board of Direct Taxes) has released a notification on 12th February 2020 called the Income-tax (4th Amendment) Rules, 2020. The CBDT has introduced Forms 10-IC and 10-ID to opt for reduced tax rates as declared under Section 115BAA and Section 115BAB respectively for domestic companies.

Background

With the introduction of Section 115BAA of the Income Tax Act, 1961, domestic companies now have an option to pay tax at flat 22% effective 1st April 2020. With the introduction of Section 115BAB of the Income Tax Act, 1961, new domestic manufacturing companies will have an option to pay tax at a flat 15% effective 1st April 2020 provided they satisfy some conditions.

Income Tax (4th Amendment) Rules 2020

The Income Tax (4th Amendment) Rules 2020 shall come into effect on April 1 2020. There are two new rules inserted after rule 21AD:

Rule 21AE: This rule introduces the Form 10-IC to opt for the new taxation under subsection (5) of Section 115BAA. This is applicable for any previous year relevant to the assessment year beginning on or after the 1st April 2020. This new Form 10-IC can only be submitted electronically duly authorised/verified with a digital signature or with an electronic verification code.

The procedure for filing for Form 10-IC, details on how to generate verification code, and the policies around security, archiving and retrieval need to be put in place by the Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems).

Rule 21AF: This rule introduces the Form 10-ID to opt for the new taxation under subsection (7) of Section 115BAB. This is applicable for any previous year relevant to the assessment year beginning on or after the 1st April 2020. This new Form 10-ID can only be submitted electronically duly authorised/verified with a digital signature or with an electronic verification code.

The procedure for filing for Form 10-ID, details on how to generate verification code, and the policies around security, archiving and retrieval need to be put in place by the Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems).

Principal Rules Appendix II: Forms 10-IC and 10-1D to be inserted after Form 10-IB.

Form 10-IC

Here are the details of Form 10-IC as given in the official notification which needs to be filled:

Addressed to the Assessing Officer, the companies need to furnish the name of Principal Officer in the company who is exercising the option under sub-section (5) of Section 115BAA on behalf of the company (name, address, PAN, etc. to be filled), and specify the previous years. If the company has any units in the International Financial Services Centre (referred to in sub-section (1A) of Section 80 LA), then details of the units need to be provided. If option under sub-section (4) of Section 115BA has been exercised in Form 10-IB by the company, then it has to be declared withdrawn and also specify the previous years.

Form 10-ID

Here are the details of Form 10-ID as given in the official notification which needs to be filled:

Addressed to the Assessing Officer, the companies need to furnish the name of Principal Officer in the company who is exercising the option under sub-section (7) of Section 115BAB on behalf of the company (name, address, PAN, date of commencement of manufacturing, etc to be filled), and specify the previous years.

The notification along with Form 10-IC and Form 10-ID can be accessed below:

Income-Tax-4th-Amendment-rules

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Post by Arnold Thomas

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