All About Form 10-IC & 10-ID CBDT Corporate Tax for Concession

What is Corporate Tax?

Corporate tax is a direct tax applicable to all the companies registered under the Companies Act of India and they are required to pay the corporate tax as per the rate decided by the Ministry of Corporate Affairs.

The Corporate Tax rate cut was one of the sensational happenings of 2019. The said rate cut came into being after the 37th GST Council Meeting that was held in September 2019 chaired by Union Finance Minister Nirmala Sitharaman.

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Corporate Tax Rates going down from 35% to 25.7% (including cess and surcharges) was a hail for those who had huge investments in the sector as the amendment increased the cash flow in the sector leading to a higher probability of profits. The amendment was supposed to function only for those who avail of it (on a voluntary basis). Many went to their tax experts for advice on adopting the law.

If a company wishes to avail of the benefits of Corporate Tax Rate Cut here are the major to minutest details of the forms that are prescribed by the Tax Department for availing the reduced corporate tax rate policies. Central Board of Direct Tax (CBDT) has launched Form 10-IC and 10-ID for the existing firms that wish to switch to the lower corporate tax rate.

The other noticeable amendment by our government was reduced tax rates for manufacturing units that were incorporated after 1 October 2019 and are going operational before 31st March 2023. The tax rate changed to 15% from the earlier 25%.

The aforementioned amendments can be exercised by the firms or manufacturing units that are registered as domestic firms for any previous year relevant to the assessment year (starting on or after the 1st day of April 2020). The companies that are filing tax u/s 115BAA of the Income Act are eligible to file Form 10-IC for adopting a new corporate tax rate and the manufacturing units that are filing tax u/s 115BAB of the Income Tax Act are eligible to file Form 10-ID for adopting the reduced tax rates.

In-depth Knowledge of Form 10-IC

Companies that are operating in India and are paying corporate tax u/s 115BAB of the Income Tax Act are eligible to file Form 10-IC. The amended rate decided by the government is 22% from the earlier 30%. The effective rate including the entire cess and surcharges like SWachh Bharat Surcharge, education cess, etc. that are levied, the aggregate percentage becomes 25.17% from 34.94%.

The form functions on a voluntary basis and is available to be filed by companies that wish to benefit from the new corporate tax rate. The online 10-IC Form will be considered valid only if it is authenticated with a digital signature or an Electronic Verification Code (EVC) seeking a company’s basic details like name, PAN, registered address, date of incorporation and nature of business. Companies must acknowledge that the policy once adopted shall not be revised and additionally, companies will have to drop their concessional rate of 25% applicable under the former regime.

In-depth Knowledge of Form 10-ID

Form 10-ID functions for the manufacturing units that are incorporated after 1 October 2019 and are willing to adopt the new tax rates i.e. 15% from the earlier 25% along with other incentives. The form is optional for the manufacturing firms paying tax u/s 115BAB of the Income Tax Act.

Form 10-ID along with its basic details, the assessee company needs to give the date of commencement of manufacturing activities. Further, the company must ensure to fulfil the conditions kept by the government in regard to availing the concessional tax rates. The option once adopted cannot be dropped.

The Due Date for Filing the Forms

Companies willing to adopt the new tax rates must file the forms with accurate information electronically before the due date for filing the ITR arrives (i.e. 30 September 2020). Ultimately companies have enough time to evaluate their situation and adopt the policy that benefits them the most.

Download Form 10-IC and 10-ID in PDF Format