To provide entrepreneurs with a lower tax rate, the Central Board of Direct Taxes created Form 10-IB. Individuals and Hindu undivided families who do not qualify for deductions or exemptions under the Income Tax Act have this option.
The declaration of tax exemption rights in Form 10-IB follows Section 115BA(4) of the Income Tax Act of 1961. This allows for paying income tax at 25% of the total income. Individuals or entities who pay non-residents or foreign corporations are issued a TDS certificate on Form 10-IB. Form 10-IB is an essential part of the TDS process because it proves that the proper amount of tax was deducted and remitted to the government. It is critical to comprehend both the purpose of this form and the information contained within it.
The purpose is to demonstrate that the correct amount of tax was deducted at the source and remitted to the government. TDS certificates are required for non-residents and foreign corporations to claim tax credits in their home country. It is also necessary for efficient tax return processing.
Do you need tax breaks for your new business? If so, keep reading to learn more about Form 10-IB of the Income Tax Act.
Section 115BA of the Income Tax Act Explained
Section 10-IB was incorporated in the Income Tax Act during the 2016 budget, allowing eligible startups engaged in eligible businesses to avail of deductions on their profits and gains. The section became applicable from the assessment year 2017-18. Section 10-IB provides a significant tax benefit to eligible startups engaged in eligible businesses and promotes the growth of the startup ecosystem in India.
Also Read: Section 115BAC: Features and Benefits of Section 115BAC
Who Can Benefit from Form 10-IB?
Form 10 IB is used to file an appeal for the enrollment of a trust or company under Section 12A of the Income Tax Act of 1961. Startups and businesses can file Form 10 IB for tax rebates. Individuals and Hindu Undivided Families must file this declaration to benefit from the new tax regime under Section 115AC of the Income Tax Act of 1961.
The administration is fostering and promoting India's startup culture to boost our economic growth by making such options available. Form 10-IB must be submitted electronically through the government of India's e-Tax filing website and verified with a digital signature or an electronic verification code.
Advantages of Form 10-IB
- Individuals and HUFs willing to forgo certain exemptions and deductions available under the old tax regime can benefit from lower tax rates under the new tax regime introduced in the Union Budget 2020.
- The new taxation system is optional, and taxpayers can continue using the old one.
- The benefit of opting for the new taxation policy is that taxpayers can save money on their taxes if willing to give up certain exemptions and deductions.
- This lowers tax rates for different income levels, saving taxpayers significant amounts. However, it is essential to note that this new policy may not be suitable for all taxpayers, as some may prefer to keep their exemptions and deductions.
How to Fill Out Form 10-IB Online?
- Access the income tax portal at www.incometax.gov.in.
- Enter your user ID, i.e. PAN number and password.
- Select 'Income Tax Forms' from the e-file menu.
- Select Form 10 IB from the drop-down menu.
- Enter information such as the company's name, PAN number, date of incorporation, nature of operations or activities, etc.
- Fill out the verification information and click the 'Purview and Submit' button.
- A confirmation email will be sent to the registered email address.
The form can only be completed online and must be digitally verified. The deadline for completing Form 10-IB is the same as the deadline for filing Income Tax Returns.
Before submitting the form online, ensure all the required information is correctly filled out and digitally verified. Tax authorities may levy penalties and fines if the form is not submitted on time.
Individuals and businesses whose accounts do not need auditing for fiscal year 2022-2023 must file their returns by July 31st, 2023. If the trust's accounts need auditing, the deadline to file an ITR is October 31, 2023.
Also Read: Taxation Policy and Rules for Non-resident Indians (NRIs)
Conclusion
Domestic companies can pay income tax if specific requirements under section 115BA are met. If a company wants to use this tax rate, it must do so in the prescribed manner on or before the deadline for filing its section 139 income return. Form 10-IB, the company must provide information such as its name, address, PAN, and date of incorporation. The form must also show how much income tax is owed and how much MAT (Minimum Alternate Tax) credit is available.
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