Form 29B of Income Tax Act, What is Form 29B, How to file Form 29B, Form 29B Applicability, Ebizfiling

All you need to know about Form 29B of Income Tax Act

What is Form 29B of Income Tax Act and How to file Form 29B? And Form 29B Applicability

Introduction

The Income Tax Appellate Tribunal (ITAT) ruled in July 2020 that business loss and business expenditure are not the same things. The Tribunal found that the provisions of Section 115JB of the Income Tax Act, 1961 do not allow for the augmentation of taxable earnings by adding the loss sustained in the redemption of mutual funds. All businesses that are subject to Section 115JB are required to file Form 29B. This article will include information on “What is Form 29B of the Income Tax Act?”, “How to file Form 29B online?”, and Form 29B Applicability.

What is Form 29B of Income Tax Act?

Form 29B is a report required under Section 115JB for calculating the Company’s book profits. A CA (Chartered Accountant) must provide the same for a company that falls under Section 115JB. This assists the assessee in ensuring correct book profit computation in order to claim the MAT (Minimum Alternate Tax) credit resulting from the tax computed in compliance with the Income Tax Act. Before moving further let’s have a quick look at the meaning of MAT.

MAT (Minimum Alternate Tax) Meaning

It is possible that a taxpayer, such as a Company, generated revenue during the year but was able to decrease its tax due or avoid paying any tax at all by utilising various provisions of the Income-tax Law (such as exemptions, deductions, depreciation, and so on).

 

The goal of MAT is to bring “zero tax companies” into the tax net, which, despite earning considerable book profits and paying large dividends, do not pay any tax due to various tax discounts and incentives offered by the Income-tax Law.

 

Since its inception, various amendments have been made to the provisions of MAT, and it is now imposed on businesses under the provisions of section 115JB.

Purpose of Form 29B of Income Tax Act

The business must calculate both the MAT tax and the tax that must be paid under ordinary tax provisions. In fact, the business have to pay the greater amount according to the Income Tax Law. If the MAT amount is much larger than the ordinary tax payable amount, then the business must pay the MAT amount. This figure is based on the book profit reported on Form 29B. This report is audited by the company’s Chartered Accountant. However, in order to obtain MAT credit, Form 29B is required. As a result, the filing of Form 29B is required under the Income Tax Act, and it is advantageous for businesses to claim MAT credit.

Information on Form 29B Applicability

Companies must appoint a CA (after logging in with My CA service) to provide an audit report in the form of Form 29B of the Income Tax Act. Following that, a registered CA must either accept or reject the request for an audit report, and if accepted, must complete and submit Form 29B.

 

All companies must get a certificate from an authorized CA (Chartered Accountant) in Form 29B verifying that the book profits have been estimated in compliance with the Income Tax Act of 1961.

 

The taxpayer and CA must have a valid user ID and password to access the e-Filing portal. The taxpayer’s PAN must be active, and the CA must be assigned for Form 29B under My CA. The CA must have a valid Digital Signature Certificate (DSC) registered on the Income Tax  e-Filing portal and it should not be expired.

How to file Form 29B Online?

  • Visit to the Income Tax official website, from their Login to the Income Tax E-Filing portal with your User ID and Password.

  • On the Dashboard click on the E-file from there click on Income Tax Forms and then click on File Income Tax Forms.

  • Choose Form 29B from the list of form tiles. Using the My CA service, assign a CA (if you have not assigned any CA).

  • Using the My CA service, enter the Assessment Year and assign CA. Click Continue after attaching the necessary documentation.

  • The form was submitted to the CA successfully. Along with the Transaction ID, a success message is provided. Please keep the transaction ID on hand for future reference.

Filing of Form by CA (Chartered Accountant)

  • CA needs to login to the Income Tax E-filing Portal

  • On the Dashboard click on the pending task and from their click on Worklist.

  • Once the above step is completed, Click on the Accept or Reject option for filling request of form 29B.

Important Note: If you opt to reject, you can give an explanation for your decision.

 

When a taxpayer is rejected, an email and SMS notification is issued to the taxpayer’s registered email address and mobile number, detailing the reasons for rejection.

  • If you accept a success message of your acceptance is sent. After that select file form on your worklist.

  • All the details need to be verified and then click on the continue button.

  • Click on Let’s get started page.

  • Select if Parts B and C of Form 29B are applicable by clicking on the appropriate selections and then clicking Proceed.

  • Complete all needed fields for the pertinent parts – Part A, Part B / Part C, and Accountant Report – and then click Preview.

  • Click Proceed to e-Verify on the Preview page.

  • Click on yes for confirmation.

  • Once you click on yes you will be taken to the e-verify page.

A success message is displayed along with a Transaction ID after successful e-Verification. A confirmation message is delivered to the taxpayer’s registered email address and mobile number upon successful submission for the taxpayer’s acceptance or rejection.

Acceptance of Form 29B by Taxpayer

  • Login to the Income Tax Portal.

  • Click Pending Actions, from their go to Worklist on your Dashboard.

  • Select Accept to accept the CA-uploaded form, or Reject to reject the form and offer rejection remarks.

Important Note: If you opt to reject, you can give an explanation for your decision. On rejection, CA receives an email and SMS notification at the email address and mobile number provided on the e-Filing site, including the reasons for rejection.

  • When you click Accept, you will be directed to the e-Verify page, where you may check the form you just uploaded.

A success message appears after successful e-Verification, accompanied with an Acknowledgement Receipt Number. An e-mail is sent to the taxpayer’s email address and the CA’s mobile number registered with the e-Filing system, confirming the successful submission of your form.

Conclusion

Every business with a net profit must pay Minimum Alternate Tax (MAT). The amount of book profit is stated in the Company’s audited report on Form 29B. However, for the purposes of tax calculation, it is assumed to represent the company’s income. In order to claim MAT credit in the following years, taxpayers will need to fill out Form 29B of the Income Tax Act. Furthermore, Form 29B is critical to the company’s success.

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Author: zarana-mehta

Zarana Mehta is an MBA in Finance from Gujarat Technology University. Though having a masters degree in Business Administration, her upbeat and optimistic approach for changes led her to pursue her passion i.e. Creative writing. She is currently working as Content Writer at Ebizfiling.

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