Section 115BAA was introduced to give benefit of lower tax rate to companies if they don’t claim or take benefits of various exemptions and deductions.
As per the new provision, Companies who would opt for this provision will have to pay tax at base rate of 22%, however there would be a compulsory surcharge of 10% and cess of 4%, irrespective of the income level and hence the actual base tax rate would go up to 25.17% which would be equal to a normal tax rate of 26% available to small and medium companies whereby they could even take benefit of some deduction and special exemption.
This section was made applicable for the first time last year i.e. FY 2019-20 whereby any company who wishes to opt for this section will have to also file Form 10-IC to claim benefit of this section along with a declaration that once a company has opt in for this provision same cannot be withdrawn again.
Various FAQ about the Form 10-IC is as under:
1. Is it mandatory for all applicable taxpayers (Domestic Companies) to file Form 10-IC?
No. This is optional. Form 10-IC is required to filed only if a Domestic Company chooses to pay tax at concessional rate of 22% under Section 115BAA of the Income Tax Act,1961.
2. How can I file the Form 10-IC?
You can file Form 10-IC only in online mode after logging into the e-Filing portal.
3. Do I need to file the form again for the next assessment year?
No. If you have opted for concessional tax rates once, it shall apply to subsequent assessment years and cannot be withdrawn.
4. How do I know that the form has been submitted successfully?
You will receive a confirmation on your email ID registered with the e-Filing portal. Additionally, you can also view the status on your Worklist under For your Actions tab.
5. Do I need to e-Verify while submitting the form?
Yes. Your form will be submitted once you complete e-Verification of the form using DSC only.
6. What is the time limit for filing Form 10-IC?
You will be required to file Form 10-IC on or before the due date specified under sub-section (1) of Section 139 for furnishing the returns of the income for the previous year to avail the benefit.
7. Can Form 10-IC be filed offline?
No, you can not file Form 10-IC using Offline Utility on the e-Filing portal. You can only file Form 10-IC through online mode.
8. What is the purpose of filing Form 10-IC?
As per Section 115BAA of the Income Tax Act, Domestic Companies have the option to pay tax at a concessional rate of 22% (plus applicable surcharge and cess) provided they do not avail specified deductions and incentives. Companies can opt for the concessional rate from the Assessment Year 2020 – 21 onwards only if they file Form 10-IC within the prescribed time limit.
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