BACKGROUND
Section 115BAA of the Income-tax Act, 1961 (IT Act) provides for a concessional tax rate of 22% (subject to fulfillment of specified conditions) at the option of the corporate taxpayer. To exercise this option, the taxpayer is required to file Form 10-IC on or before the due date of filing the tax return. Failure to furnish such a Form before the due date of filing the return of income would result in denial of the benefit of the concessional tax rate. Since fiscal year (FY) 2019-20 was the first year of applicability of section 115BAA of the IT Act, many taxpayers could not file Form 10-IC. Hence, many representations were made before the Central Board of Direct Taxes to relax this condition for the first year (i.e., FY 2019-20).
Recently, the CBDT has issued a Circular1 relaxing the timeline for furnishing Form 10-IC for FY 2019-20. We, at BDO in India, have summarized this circular and provided our comments on the same hereunder.
Conditions to be satisfied for availing the relaxation
- The tax return for FY 2019-20 should have been filed on or before the due date of filing the original tax return for said year.
- A taxpayer should have opted for a concessional tax regime in (e) of “Filing Status” in “Part A-GEN” of the ITR-6.
- Form 10-IC is electronically filed on or before 30 June 2022 or 3 months from the end of the month in which the Circular is issued, whichever is later.
BDO COMMENTS
As FY 2019-20 was the first year of opting for a concessional tax regime under section 115BAA of the IT Act, there could be many corporate taxpayers who may have missed filing the Form 10-IC before the due date of filing the tax return. Resultantly, their tax returns would have been processed under the normal tax regime and thereby a demand would have been raised. This Circular brings relief to such taxpayers.
It is pertinent to note that recently the Gujarat High Court2 directed the taxpayers to file an application under section 119(2)(b) of the IT Act with the Principal Chief Commissioner of Income-tax (PCCIT)/Chief Commissioner of Income-tax (CCIT) requesting his permission to file the Form 10-IC electronically. The HC also held that in the event of any recovery proceedings being initiated, the taxpayer may file an application before the AO requesting to keep the demand proceedings in abeyance and grant stay on recovery till the time the application is filed under section 119 is disposed-off.
1 Circular No 6/2022 dated 17th March 2022
2 Rajkamal Healds and Reeds Pvt. Ltd. vs. ADIT (Civil Application No. 1085 of 2022)
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