Income Tax Rule 21AD (Form 10IB) for exercising Option u/s 115BA(4) Notified by CBDT

New Income Tax Rule 21AD (Form 10-IB) Notified by CBDT for exercising Option of lower income tax rates u/s 115BA(4) for Startups

The CBDT has notified New Income Tax Rule 21AD  and Form 10-IB for exercising Option of lower income tax rates u/s 115BA(4) of the Income Tax Act, 1961, for startups, thru the Income-tax (9th Amendment) Rules, 2017 applicable from AY 2017-18 onwards.

It may be noted that earlier the Finance Act, 2016 had inserted Section 115BA under the Income Tax Act, 1961, in order to provide relief to certain newly setup domestic manufacturing companies, which stipulates an option for those companies to pay tax @25% subject to certain terms and conditions.

New Income Tax Rule 21AD (Form 10IB): CBDT Notification No. 36/2017 dt. 2 May 2017

S.O. 1381(E).—In exercise of the powers conferred by section 295 read with section 115BA of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely: –

1. (1) These rules may be called the Income-tax (9th Amendment) Rules, 2017. (2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereafter referred to as the principal rules), after rule 21AC, the following rule shall be inserted, namely:-

“21AD. Exercise of option under sub-section (4) of section 115BA

(1) The option to be exercised in accordance with the provisions of sub-section (4) of section 115BA by a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2017, shall be in Form No. 10-IB.

(2) The option in Form No. 10-IB referred to in sub-rule (1) shall be furnished electronically either under digital signature or electronic verification code.

(3) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall-

(i) specify the procedure for filing of Form referred to in sub-rule (2);

(ii) specify the data structure, standards and manner of generation of electronic verification code, referred to in sub-rule(2), for purpose of verification of the person furnishing the form referred to in the said sub- rule; and

(iii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to Form so furnished.”;

3. In the principal rules, after Form No. 10-IA, the following Form shall be inserted, namely:-

“FORM No. 10-IB

[See sub-rule (1) of rule 21AD]

Application for exercise of option under sub-section (4) of section 115BA of the Income – tax Act, 1961 (….contd…..)

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