According to Section 115BA(4) of the Income-tax Act of 1961 (ITA), the 10-IB form gives taxpayers the option to pay income tax at a rate of 25% of their total income. The assessee receives something if they meet certain standards.
Form No. 10-IB was created by the Central Board of Direct Taxes (CBDT) in an effort to enable new firms and start-ups the option of selecting a lower tax rate. Section 115BA(4) of the Income-tax Act of 1961 (ITA) grants applicants the choice to pay income tax at a rate of 25% of their total income. The assessee receives something if they meet certain standards.
Starting with the fiscal year (FY) 2016–17, private businesses that meet the requirements may file Form 10-IB applications. Form No. 10-IB must also be given electronically (EVC), and must be verified using a digital signature or an electronic verification code.
What is Form 10-IB in Income Tax?
According to Section (4) of Division 115BA of the Income Tax Act, information on the choice to apply must be given in Form 10-IB. It also pertains to the assessment year commencing on or after April 1, 2017, which must be mentioned in Form No. 10-IB.
Section 115BA of the Income-tax Act, 1961 (ITA)
To be eligible for benefits under Section 115BA, an assessee must satisfy the conditions listed below:
- The domestic company’s primary line of activity is manufacturing or production (research and distribution of manufactured goods are permitted).
- The company’s incorporation must have taken place on or after March 1, 2016
- The total revenue of the business should be determined,
- Not claiming any deductions under Sections 10AA (deduction for newly established units in SEZ), 35AD (investment allowance), 35 (research), 35CCC (agriculture extension), 35CCD (skill development), etc., and not allowing carry-forward or set-off of losses attributable to the aforementioned deductions
- After allowing for Section 32 depreciation (unless as provided in Section 32(1)(iia))
- Before the deadline for filing the first income tax return, the option must be used.
- For the remainder of their lives, the assessed person is not permitted to use the option again. However, if the individual makes use of specific options under Section 154 BAA, Section 115BA may be revoked.
How to fill Form No. 10-IB online?
Step 1: Go to www.Incometax.gov.in to access the income tax site.
Step 2: Enter the applicant’s user name and password.
Step 3: Click the ‘e-File’ option that appears after that. ‘Income Tax Forms’ should be selected in the dialogue box.
Step 4: From the drop-down menu, select Form No. 10-IB as your option.
Step 5: Complete the form by entering the information requested, including the firm name, PAN ID number, the type of the business’s operations or activities, the date the business was incorporated, and many other facts.
Step 6: Complete all of the requested verification information. You can choose to preview the form before submitting it.
Step 7: From the official website, a notification will be sent to the registered email address.
How is Form No. 10-IB different from Form No. 10-B?
Form 10-B is used to register a religious institution, trust, or charity. New businesses, people, or other entities, however, must submit Form 10-IB in order to request a tax rate reduction. If all requirements are completed, the tax rate reduction is then applied at a rate of 25% of the total revenue.
What are Sections 115BAA and 115BAB of the Income-tax Act, 1961?
Any domestic company that meets with Section 115 BAA’s requirements may choose to pay tax at a rate of 22% (plus any applicable surcharge and cess). Form No. 10IC must be filled out in order to exercise the option.
On the other hand, start-up manufacturers have the option of paying a 15% tax rate (plus any relevant surcharge and cess) under Section 115 BAB. Form No. 10-ID must be filed in this regard.
When should one File Form 10?
In line with Section 12A of the Income-tax Act of 1961, Form 10 is generated in relation to a request for the incorporation of the corporation’s charitable or moral trust. As a result, one can register for Form 10 online by going to an income tax department’s E-filing website.
Income-tax (9th Amendment) Rules, 2017
The following rules to further alter the Income-tax Rules of 1962 were enacted by the Central Board of Direct Taxes pursuant to the authority conferred by Section 295 read with Section 115BA of the Income-tax Act of 1961: –
- The Income-tax Rules of 1962 (henceforth referred to as the primary rules) include the following rule put below rule 21AC:
- The procedure for exercising the option under section 115BA’s subsection (4) is outlined in 21AD. The alternative a company plans to use in accordance with subsection (4) of Section 115BA for any prior year that will be relevant to the assessment year beginning on or after April 1, 2017, must be disclosed in Form No. 10-IB.
- The option on the Form No. 10-IB indicated in Subrule (1) must be submitted using a digital signature or an electronic verification code.
- An income-tax system director general or principal director general must:
- Describe how to file the form mentioned in sub-rule (2).
- In order to confirm the identification of the person submitting the form stated in the aforementioned sub-rule, specify the data format, standards, and procedures utilised to generate the electronic verification code mentioned in rule (2).
- In the format thus provided, be in charge of developing and implementing the appropriate security, archival, and retrieval rules.
Each domestic corporation has the choice to pay income tax following the fulfilment of particular conditions under section 115BA. When filing its section 139 income return by the deadline, the company that wants to select this rate of tax must do so in the prescribed manner (1).