The Central Board of Direct Taxes (CBDT) has given extra time till end of June for businesses to file a key form that is crucial for availing lower corporate tax rate of 22% without tax incentives that was offered in 2019 and was applicable for income earned in FY20 onwards.
To avail this lower tax rate, businesses have to opt for it by submitting form 10-IC in electronic form before filing the tax returns. For income earned in FY20, tax returns were to be filed in the assessment year starting 1 April 2020 (AY2020-21). The option once exercised, will apply for subsequent years too. However, many businesses which claimed the benefit of lower rate in their tax returns have not filed the specified form separately in this regard, leading to hardships.
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CBDT said in a statement that failure to submit this form would lead to denial of the concessional 22% tax rate and in view of the representations received for relief, extra time is being given.
“Representations have been received by the Board stating that form 10 IC could not be filed along with the return of income for assessment year 2020-21, which was the first year of filing of this form. It has been requested that the delay in filing of form 10 IC may be condoned,” CBDT said in the circular.
It said that “with a view to avoid genuine hardship to the domestic companies in exercising the option” of the lower tax rate, CBDT has directed that the delay in filing this form for 2020-21 assessment year is condoned in cases where certain conditions are met. The conditions say that the business that seeks this rate should have filed tax returns for assessment year 2020-21 on or before the due date and have opted for the benefit in the return form and form 10 IC is filed on or before 30 June 2022.
“Many companies have opted for new lower rate of 22% tax in AY 2020-21 but have not filed this form which was statutory requirement to switch over to the new rate. While processing return of AY 2020-21, huge demands were created as higher rate of 30% was applied in processing. This will be a big relief to these companies,” said Ved Jain, former president of Institute of Chartered Accountants of India (ICAI).
