New Requirement in Tax Audit Report and in ITR 6

New Tax regime i.e. "propagated as concessional tax rate" has been introduced in Finance Act which provide options to taxpayer to adopt any one of the two options and pay tax accordingly. A lot of deductions/allowance which were availed earlier by the tax payer shall be forgone. 

Section 115BAA and section 115BAB are introduced for company assessee and section 115BAC and Section 115BAD have been brought for assessee, being an Individual, HUF and Co-operative society. so that tax payer can opt for concessional tax rate regime subject to fulfillment of various conditions given in these sections.

Section 115BAA states that domestic companies have the option to pay tax at a rate of 22% plus surcharge of 10% and cess of 4%.The effective Tax Rate would be 25.17% from the Financial Year 2019-20 (i.e. Assessment Year 2020-21) onwards if such domestic companies satisfy certain conditions specified. The company need not pay tax under MAT if it opts for Section 115BAA.

Section 115BAA, Section 115BAC and Section 115BAD provide that if an assessee has opted for concessional tax rate and there is a depreciation allowance, in respect of a block of the asset, from any earlier assessment year or allowance of unabsorbed depreciation deemed so under section 72A, which is attributable to section 32(1)(iia) i.e. additional depreciation, same shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year. Sections further provide that such loss or depreciation shall be adjusted to the WDV of the respective block of the asset in the prescribed manner.

Now, the CBDT has amended Rule 5 to provide that opening WDV of the respective block of the such asset shall be increased by such depreciation or allowance if assessee has exercised an option under section 115BAA for a previous year relevant to the assessment year beginning on the 1st day of April 2020 or under section 115BAC or Section 115BAD for a previous year relevant to the assessment year beginning on the 1st day of April 2021.

To opt the concessional rate of tax ,tax payer need to file declaration

For the purpose,Central Board of Direct Taxes (CBDT)  has introduced Rule 21AF and 21AH which provide that option under section 115BAC shall be exercised by 

furnishing Form No. 10-IE and

option under section 115BAD shall be exercised by 

furnishing Form No. 10-IF. 

Both the forms are required to be furnished   electronically either under digital signature or Electronic Verification Code.

To keep track of the option adopted by the taxpayer CBDT has amended few column in Form ITR-6 and Form 3CD (Tax Audit Report.) so that information regarding adjustment for depreciation or unabsorbed depreciation could be incorporated in these forms.

Amendment in Form 3CEB

Section 115BAB provides that if the Assessing Officer (AO) is satisfied that due to close connection between the company and any other person, the course of business is so arranged that the company produces more than the ordinary profits then he shall compute reasonable profits and gains of such company. For this purpose, AO may invoke the provisions of Section 92BA pertaining to the specified domestic transaction.

The Form 3CEB has been amended to provide details in respect of these transactions.

Source:- Notification No. G.S.R. 610(E), dated 01-10-2020