Form No. 10-IB of the Income-tax Act (ITA) described

In an effort to offer start-ups and businesses a choice to opt for a lower tax rate, the Central Board of Direct Taxes (CBDT) introduced Form No. 10-IB. It is an application under Section 115BA(4) of the Income-tax Act, 1961 (ITA)  that provides the option to pay income tax at 25% on the total income. This is provided if the assessee satisfies certain specified conditions. 

Eligible private companies can apply for Form 10-IB for the financial year (FY) 2016-17 and onwards.

Also, Form No. 10-IB is required to be furnished electronically, verified through a digital signature or an electronic verification code (EVC).

Section 115BA of the Income-tax Act, 1961 (ITA)

The conditions for an assessee to be eligible to claim benefits under Section 115BA include:

• The domestic company is solely engaged in the business of manufacturing or production (research and distribution of product manufactured is allowed)
• The company should be registered on or after March 1, 2016
• The total income of the company should be computed,
  • without claiming any deduction under the provisions of Section 35AD (investment allowance), Section 35 (research), Section 35CCC (agriculture extension), Section 35CCD (skill development), Section 10AA (deduction for newly established units in SEZ), etc., without allowing carry forward or set-off of loss attributable to above deductions
  • After allowing depreciation under Section 32( other than Section 32(1)(iia))
•  The option should be exercised before the due date of filing the first return of income

Once the option is exercised, then the assessee cannot opt out for a lifetime. However, in cases where the person exercises certain options under Section 154BAA, then Section 115BA may be withdrawn

Specimen in PDF Format

Form No. 10-IB

How to fill Form No. 10-IB online?

• Log in to the income tax portal: www. Incometax.gov.in
• Key in the user-ID (PAN) and password
• Click on ‘e-File’ and select ‘Income Tax Forms’
• Choose Form No. 10-IB from the drop-down menu
• Key in details such as company’s name, PAN number, date of incorporation, the nature of the company’s operations or activities, etc
• Fill the verifications details and click on ‘Purview and Submit’ option
• An email notification of confirmation will be sent to the registered email

Frequently Asked Questions (FAQs)

• How is Form No. 10-IB different from Form No. 10-B?

The Form No. 10-B pertains to the registration of a religious charity, trust, and institution. Conversely, start-ups, businesses, or individuals who wish to seek a concession in tax rate need to fill up Form No. 10-IB, which is then applied at the rate of 25% of the total income, provided certain conditions are fulfilled.

• What are Sections 115BAA and 115BAB of the Income-tax Act, 1961?

Any domestic company under Section 115BAA can choose to pay tax at the rate of 22% (plus applicable surcharge and cess) provided it fulfils certain conditions specified.  Form No. 10IC is to be filled to avail of the option.

On the other hand, Section 115BAB provides new manufacturing companies or start-ups a choice to pay tax rate at 15% (plus applicable surcharge and cess). Form No. 10-ID is required to be filed in this regard.