Form 29B ensures transparency in reporting book profits and compliance with Section 115JB of the Income Tax Act. It is a critical form for companies falling under the Minimum Alternate Tax (MAT) regime, as it facilitates accurate tax computation based on book profits certified by a Chartered Accountant.
Filing this form correctly and on time helps companies stay compliant and avoid penalties. Let’s explore everything you need to know about Form 29B—from its applicability to the filing process and consequences of non-compliance.
What is Form 29B of Income Tax Act?
Form 29B is an official form mandated by the Income Tax Act, 1961 under Section 115JB. It is designed to declare the “book profits” of a company, audited and certified by a Chartered Accountant (CA).
Purpose of Form 29B:
- To disclose book profits as per provisions of MAT.
- To ensure tax compliance based on certified figures.
- To standardize tax liability under Section 115JB.
Companies subject to MAT must file Form 29B along with their income tax return. It forms part of the broader regulatory framework to promote transparency and accuracy in corporate taxation.
What is Minimum Alternate Tax (MAT)?
Minimum Alternate Tax (MAT) is a taxation mechanism introduced to ensure that companies with substantial profits and low taxable income (due to various exemptions or deductions) still pay a minimum level of tax.
Why MAT Exists:
Even though a company might report high book profits, they may claim deductions and avoid taxes. MAT closes this loophole by mandating a minimum tax based on these book profits.
How Form 29B Supports MAT:
Form 29B certifies the company’s book profits, which are then used to calculate MAT liability.
Example:
If a company reports a book profit of Rs. 2 crore but shows taxable income as Rs. 10 lakh after deductions, MAT applies a fixed percentage (15% + surcharge & cess) on Rs. 2 crore instead—ensuring fair contribution.
Applicability of Form 29B
Form 29B applies only to companies liable to pay Minimum Alternate Tax under Section 115JB.
Entities Required to File Form 29B:
- Domestic and foreign companies operating in India.
- Companies showing book profits exceeding taxable income.
- Companies availing tax exemptions or deductions resulting in low or zero tax liability.
Tax Rate under MAT (as of AY 2024–25):
- 15% of book profits (plus applicable surcharge and cess).
Form 29B becomes essential when MAT liability arises, as it documents CA-certified figures used to compute this liability.
Which are the Conditions Applied to Form 29B?
Before filing Form 29B, ensure the following conditions are met:
- Only companies are eligible to file Form 29B.
- Filing is mandatory if the company is subject to MAT provisions under Section 115JB.
- Certification from a Chartered Accountant (CA) is mandatory.
- All disclosures must be based on audited books of accounts.
- It must be filed before the due date of the income tax return (ITR).
File Form 29B to ensure full compliance with MAT regulations.
How is Form 29B to be Filed?
Form 29B must be filed online through the Income Tax Department’s e-filing portal.
Step-by-Step Guide to File Form 29B Digitally:
- Log in to the Income Tax e-filing portal using your company’s credentials.
- Navigate to “e-File” > “Income Tax Forms” > “File Income Tax Forms.”
- Select Form 29B from the list.
- Enter the details of book profits, adjustments, and CA certification.
- Upload documents such as:
- Audited financial statements.
- Computation of book profits.
- Chartered Accountant’s certificate.
- Verify digitally using DSC (Digital Signature Certificate).
Note: Manual submission of Form 29B is not permitted.
Consult a Chartered Accountant for seamless filing.
Penalties for Non-filing of Form 29B
Failing to file Form 29B on time can lead to:
- Penalty under Section 271B of the Income Tax Act:
A fine of Rs. 1.5 lakh or 0.5% of turnover, whichever is lower. - Additional scrutiny by the Income Tax Department.
- Delays in processing income tax returns or refunds.
Stay penalty-free by filing Form 29B on time.
Breakdown of Form 29B (Income Tax Act)
Here’s a section-wise breakdown of what Form 29B includes:
| Section | Details to Be Provided |
|---|---|
| General Information | Name, PAN, Assessment Year, Nature of Business |
| Book Profit Details | Net profit, Adjustments (additions/deductions) |
| Computation of Book Profits | As per Section 115JB, post-adjustment figures |
| Tax Calculation | MAT payable, surcharge, cess |
| CA Certification Section | Name, Membership No., FRN, Signature, Date of audit |
Always double-check figures and certifications before submission to avoid rejections or errors.
Conclusion
Form 29B plays a vital role in ensuring tax transparency and MAT compliance for companies in India. From accurate disclosure of book profits to avoiding penalties, every step of filing this form is important.
Ensure seamless compliance with MAT requirements by filing Form 29B on time and with accurate details. Consult a qualified Chartered Accountant if necessary.
