CBDT Specified Forms Prescribed in Appendix II of IT Rules 1962, to be Furnished Electronically under Sub-rule (1) & (2) of Income Tax Rules 1962.
The Central Board of Direct Taxes (CBDT) has issued Notification No. 5/2024, which mandates the electronic filing of certain forms under the Income Tax Rules, 1962. In accordance with Rule 131, sub-rule (1) and sub-rule (2), the Director General of Income Tax (Systems) in Bengaluru, with CBDT approval, has specified the forms to be filed electronically and verified as per the provisions of Rule 131(1). This notification, effective from October 31, 2024, enhances digital compliance and introduces efficiency into the tax filing process.
Forms to be Filed Electronically
The following forms are included under the notification:
- Form 3CEDA: Application for seeking Rollback of an Advance Pricing Agreement (APA).
- Form 3C-0: Application for Approval under Section 35CCC(1) of the Income Tax Act, 1961.
Understanding Rollback of Advance Pricing Agreement (APA)
The concept of Advance Pricing Agreement (APA) was first introduced in India via the Finance Act, 2012. An APA is a mutual agreement between the Central Board of Direct Taxes (CBDT) and a taxpayer that predetermines the arm’s length price (ALP) for international transactions. The APA framework serves as a proactive tool to mitigate potential transfer pricing disputes, fostering cooperation between taxpayers and tax authorities to ensure smoother tax processes. APAs can provide certainty in transfer pricing for a maximum period of five years.
To further ease compliance, the Finance (No. 2) Act, 2014 introduced a rollback mechanism. This provision allows the APA terms to apply to the four years preceding the initial year of the APA. However, rollback eligibility requires that all four preceding years must be chosen, except in cases where:
- The specific international transaction did not occur in one of the years.
- The taxpayer does not meet the rollback conditions for a particular year.
In such scenarios, taxpayers may opt for rollback in other qualifying years.
Section 35CCC(1) Provisions Explained
Under Section 35CCC(1) of the Income Tax Act, 1961, taxpayers can claim deductions for expenses incurred on Board-approved agricultural extension projects. These projects, aligned with prescribed guidelines, are aimed at improving agricultural practices and outcomes. Deduction benefits have varied over time:
- For assessment years up to FY 2019-20, taxpayers were eligible for a deduction of 150% of the qualifying expenditure.
- From FY 2020-21 onwards, the deduction rate is 100% of the qualifying expenditure.
The criteria for project approval are outlined under Rule 6AAD of the Income Tax Rules, with specific conditions for eligibility provided under Rule 6AAE.
Conclusion
This notification reinforces the CBDT’s commitment to streamlining tax compliance through digital processes, facilitating better tax management for both international transactions and agricultural sector advancements. With electronic filing now mandatory for Forms 3CEDA and 3C-0, taxpayers involved in international dealings or agricultural extension initiatives should ensure timely and compliant submissions in line with these updated rules.
To Access the CBDT Notification No. 5/2024 Click Here
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