ITR

Form 10-IB

10-IB form is the option to pay income tax at a rate of 25% of the entire income is an application under Section 115BA (4) of the Income-tax Act of 1961 (ITA). If the assessee meets certain requirements, something is delivered.

The Central Board of Direct Taxes (CBDT) established Form No. 10-IB in an effort to give start-ups and businesses an opportunity to choose a lower tax rate. The option to pay income tax at a rate of 25% of the entire income is an application under Section 115BA(4) of the Income-tax Act of 1961 (ITA). If the assessee meets certain requirements, something is delivered.

Private enterprises that meet the requirements may submit Form 10-IB applications beginning with the fiscal year (FY) 2016–17. A digital signature or an electronic verification code must be used to verify Form No. 10-IB, which must also be provided online (EVC).

What is Form 10-IB in Income Tax?

Information on the decision to apply must be included in Form 10-IB in accordance with Subsection (4) of Division 115BA of the Income Tax Act. Additionally, it relates to the assessment year beginning on or after April 1, 2017, which is required to be specified in Form No. 10-IB.

Section 115BA of the Income-tax Act, 1961 (ITA)

The following prerequisites must be met for an assessee to qualify for benefits under Section 115BA: 

  • The domestic company is exclusively involved in the manufacturing or production business (research and distribution of product manufactured is allowed).
  • The business must have been incorporated on or after March 1, 2016
  • The company’s entire revenue should be calculated,
  • Not claiming any deductions under Sections 35AD (investment allowance), 35 (research), 35CCC (agriculture extension), 35CCD (skill development), Section 10AA (deduction for newly established units in SEZ), etc., and not allowing carry-forward or set-off of losses attributable to the aforementioned deductions.
  • Following the allowance of Section 32 depreciation (other than under Section 32(1)(iia))
  • The option must be exercised before the deadline for submitting the first income tax return.
  • The assessee cannot exercise the option again for the rest of their lives. However, Section 115BA may be withdrawn if the person exercises certain alternatives under Section 154 BAA.

How to fill Form No. 10-IB online?

Step 1- Log in to the portal of income tax i.e.-: www. Incometax.gov.in

Step 2- Enter the user ID and password of the applicant

Step 3- Then the option of ‘e-File’ will appear, click on it.  Select ‘Income Tax Forms’ from the dialogue box.

Steps 4- From the drop-down menu choose the option of Form No. 10-IB.

Step 5- Now fill up the details asked in the form such as name of the company, PAN ID number, the nature in which company operates or nature of its activities, the date when company got incorporated and many such others.

Step 6- Now fill up all the verification details asked. The option of preview will appear, preview the form and submit it.

Step 7- A notification would be sent to the registered email ID from the official site.

How is Form No. 10-IB different from Form No. 10-B?

The registration of a religious charity, trust, or institution is covered by Form No. 10-B. In contrast, new firms, individuals, or other entities who wish to request a tax rate reduction must complete Form 10-IB, which is subsequently applied at a rate of 25% of the total income, provided certain requirements are met.

What are Sections 115BAA and 115BAB of the Income-tax Act, 1961?

Any domestic firm that complies with the requirements listed in Section 115 BAA may elect to pay tax at the rate of 22% (plus any relevant surcharge and cess). In order to use the option, Form No. 10IC must be completed.

On the other side, Section 115 BAB offers start-up manufacturers the option of paying a 15% tax rate (plus applicable surcharge and cess). In this regard, Form No. 10-ID must be filed.

When should one File Form 10?

Form 10 is produced about an appeal for an enrolment of the charitable or moral trust of the corporation in accordance with Section 12A of the Income-tax Act of 1961. As a result, by visiting an income tax department’s E-filing website, one can register online for Form 10 there.

Income-tax (9th Amendment) Rules, 2017

The Central Board of Direct Taxes has the authority granted by Section 295 read with Section 115BA of the Income-tax Act of 1961 to enact the following regulations to further change the Income-tax Rules of 1962: –

  • The following rule has been placed after rule 21AC in the Income-tax Rules of 1962 (hence referred to as the principal rules) as follows:
  • Exercise of the option under subsection (4) of section 115BA is described in 21AD. A firm must include information in Form No. 10-IB regarding the option it intends to take in accordance with subsection (4) of Section 115BA for any prior year that will be relevant to the assessment year starting on or after April 1, 2017.
  • Either a digital signature or an electronic verification code must be used to submit the option on the Form No. 10-IB mentioned in Subrule (1).
  •  A Director General or Principal Director General of the Income-tax System must:
  1. Describe the filing process for the form referred to in sub-rule (2)
  2. Specify the data format, standards, and methods used to generate the electronic verification code mentioned in rule (2) in order to verify the identity of the person submitting the form mentioned in the aforementioned sub-rule.
  3. Be in charge of creating and carrying out the proper security, archival, and retrieval policies in the form thus provided.

Conclusion

Every domestic corporation has the option to pay income tax upon satisfaction of specific requirements under section 115BA. The business that wishes to choose this rate of tax must do so in the prescribed manner on or before the deadline for filing its section 139 income return (1). Vakilsearch provides knowledge and assistance regarding this topic- FORM 10IB even in a more in-depth way.

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