Companies opting for a concessional rate of corporate tax at 22 per cent will get time up to June 30 to file a statutory forms to avail of this option for the Assessment Year 2020-21 (Fiscal Year 2019-20). Experts say this will give relief to companies facing demand at the rate of 30 per cent as they could not file the said form.

The normal rate of Corporate Tax is 30 per cent.

“The delay in filing Form 10-IC as per Rule 21AE of the Income Tax Rules for the previous year relevant to AY 2020-21 is condoned,” the Central Board of Direct Taxes (CBDT) said a circular. Howver, it will be subjected to some conditions such as Tax Return for AY 2020-21 has been filed on the due date or before, the assessee company opted for concessional tax by giving the option in ITR Form 6.

The new option will be available if “the required form (10-IC) is filed electronically on or before June 30, or 3 months from the end of the month in which this Circular is issued, whichever is later,” the circular dated March 17 mentioned.

On September 19, 2019, Finance Minister Nirmala Sitharaman had announced to promote growth and investment, a new provision has been inserted in the Income-tax Act with effect from FY 2019-20, which allows any domestic company an option to pay income-tax at the rate of 22 per cent subject to the condition that they will not avail any exemption/incentive.

The effective tax rate for these companies shall be 25.17 per cent inclusive of surcharge & cess. Also, such companies shall not be required to pay Minimum Alternate Tax (MAT), she had then said. An ordinance was promulgated for the new provision which was later replaced by law. Accordingly, Taxation Laws (Amendment) Act, 2019 inserted Section 115BAA in the Income Tax Act w.e.f. April 1, 2020.

To avail the concessional rate, a corporate assessee must submit Form 10- IC electronically on or before the due date of filing of return of income. Such option once exercised, shall apply to subsequent assessment years. Failure to furnish such option in the prescribed form on or before the due date results in denial of concessional rate

According to CBDT, representations have been received stating that Form 10-IC could not be filed along with the return of income for AY 2020-21, which was the first year of filing this form. It has been requested that the delay in filing of Form I0-IC may be condoned. The board said that to avoid genuine hardship to the domestic companies in exercising the option, delay in filing the form is condoned.

Chartered Accountant and former President of Institute of Chartered Accounts in India, Ved Jain said that many companies though have opted for new lower rate of 22 per cent tax in AY 2020-21 but have not filed this form which was statutory requirement to switch over to new rate. “While processing return of AY 2020-21, huge demands were created as higher rate of 30 per cent was applied in processing. This will be a big relief to these companies,” he said.

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