The Income Tax Department of India announced on Monday that it will provide relief to companies that faced delays in filing a crucial form to claim the benefit of a lower corporate tax rate without incentives for the financial year 2020-21 (FY21). This move comes as a response to requests from businesses seeking relief from the department.
The specific form in question is Form 10-IC. Under the provisions of the Income Tax Act, Indian companies are eligible to pay taxes at a concessional rate of 22%, along with applicable surcharges and cess, provided they refrain from availing specified deductions and incentives. This option allows companies to avail of the lower tax rate starting from FY20 if they file Form 10-IC within the stipulated time frame.
The Central Board of Direct Taxes (CBDT) outlined several conditions for condoning the delay in filing Form 10-IC. One of the key requirements is that the income tax return for the relevant assessment year must have been filed on or before the due date.
Experts believe that this decision will offer much-needed relief to companies that opted for the 22% tax rate while filing tax returns for the assessment year 2021-22. Due to their failure to file Form 10-IC with their tax return, these companies did not receive the concessional tax rate.
Ved Jain, a tax expert and former president of the Institute of Chartered Accountants of India (ICAI), explained that these companies must now e-file Form 10-IC for the assessment year 2021-22 before January 31, 2024. By adhering to this deadline, these companies can qualify for the lower tax rate of 22%.
This measure by the Income Tax Department seeks to ensure that eligible companies benefit from the lower corporate tax rate without incentives while allowing for reasonable accommodations in the filing process. It simplifies the process for these companies to access the concessional tax rate, providing them with financial benefits.