Wednesday, October 25, 2023

CBDT's Relief for Late Form 10-IC Filings: AY 2021-22


In a recent and significant development, the Central Board of Direct Taxes (CBDT) has introduced a relief measure of considerable importance for domestic companies dealing with challenges in filing Form 10-IC for Assessment Year (AY) 2021-22. Circular No. 19/2023, issued on 23-10-2023, by CBDT, signifies an essential step to alleviate the pressures faced by these companies.

The Role of Rule 21AE and Its Significance

At the core of this relief initiative is Rule 21AE of the Income-tax Rules, 1962. This rule not only prescribes the manner for exercising the option under section 115BAA for domestic companies but also holds great significance for the business community. It establishes the procedure for exercising the said option by furnishing Form No. 10-IC for any previous year relevant to the assessment year beginning on or after April 1, 2020.

The Crucial Need for Relief

The importance of CBDT's decision becomes evident when we consider the challenges faced by domestic companies. Numerous representations reached the CBDT, underscoring the difficulties companies encountered in filing Form No. 10-IC for AY 2021-22 within the stipulated due date or extended due date. Recognizing the genuine hardships faced by these companies, CBDT decided to take action.

Importance of CBDT's Relief Measure

The relief measure introduced by CBDT carries substantial importance for the business community. It serves several crucial purposes:

  1. Mitigating Genuine Hardships: CBDT's intervention seeks to alleviate the genuine hardships faced by domestic companies. It acknowledges that unforeseen circumstances can impede timely filings, and this relief measure offers a lifeline to businesses in such situations.

  2. Promoting Compliance: Compliance with tax regulations is vital for the smooth functioning of the economy. By condoning the delay in filing Form No. 10-IC under specific conditions, CBDT encourages businesses to fulfill their obligations without unnecessary punitive measures.

  3. Providing Clarity: The circular provides clarity regarding the eligibility criteria and the conditions that must be met for availing of this relief. This transparency is essential for businesses to understand their responsibilities and take corrective actions when necessary.

Conditions for Condoning the Delay

The relief measure put forth by CBDT is subject to specific conditions that businesses must meet to benefit from it. These conditions apply to the previous year relevant to AY 2021-22.

  1. Timely ITR Filing: The first condition emphasizes the importance of filing the return of income for the relevant assessment year on or before the due date specified under section 139(1). This initial deadline must be met to qualify for the relief.

  2. Opting for Section 115BAA: Companies must have opted for taxation under section 115BAA, which offers a reduced tax rate. This choice should be evident in the "Filing Status" section of the Form of Return of Income (ITR-6).

  3. Deadline for Form No. 10-IC: The relief provided by CBDT is contingent on the timely filing of Form No. 10-IC. This form must be filed electronically on or before 31.01.2024 or within three months from the end of the month in which Circular No. 19/2023 is issued, whichever is later.

In conclusion, CBDT's decision to condone the delay in filing Form 10-IC for AY 2021-22 under specific circumstances is a significant relief initiative for domestic companies. It not only acknowledges the challenges businesses face but also underscores the importance of compliance while providing much-needed clarity on the eligibility criteria and conditions for availing of this relief. This measure is not only beneficial but also serves as an essential step in facilitating a business-friendly tax environment.