CBDT’s Income-Tax (Fifth Amendment) Rules 2025: Changes to Rule 12CA, 12CC & New Forms

The Central Board of Direct Taxes (CBDT) recently introduced the Income-tax (Fifth Amendment) Rules, 2025, announced via Notification No. 17/2025 on February 24, 2025. These rules modify the Income-tax Rules of 1962, focusing on Rule 12CA and Rule 12CC, and introduce new forms for business and securitisation trusts. This update is crucial for trusts to ensure compliance with tax obligations.

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Why Are These Changes Important?

The 2025 amendments focus on easing compliance burdens while tightening reporting standards. Key highlights include:

1. Revised Rule 12CA: Mandates stricter documentation for non-residents claiming tax treaty benefits.
2. Modified Rule 12CC: Introduces digital verification mechanisms for tax residency certificates (TRCs).
3. New Form 10-IEA: A simplified declaration form for non-residents to claim treaty benefits.

These changes align with India’s push toward a digitally-driven tax ecosystem, reducing manual interventions and minimizing disputes.

A Closer Look at Revised Rule 12CA & 12CC

Rule 12CA: Stricter Documentation for Treaty Benefits

Non-residents must now submit additional proofs, such as bank statements and business activity reports, to claim tax treaty benefits. For instance, a foreign company operating in India must provide evidence of its tax residency and primary business operations abroad.

Rule 12CC: Digital Verification of TRCs

Taxpayers can now upload TRCs via the Income Tax Portal, eliminating physical submissions. This speeds up processing and reduces errors.

New Form 10-IEA: Simplified Declarations

Form 10-IEA replaces older, cumbersome formats. It requires basic details like PAN, treaty eligibility, and a self-declaration of tax residency.

Key Changes at a Glance.

Reference: Income Tax India Portal

Impact on Business and Securitisation Trusts.

Business trusts, governed by section 115UA, and securitisation trusts, under section 115TCA, now face new filing requirements. Business trusts must submit Form 64A to tax authorities by June 15 and Form 64B to unit holders by June 30, detailing income distribution. Similarly, securitisation trusts need to file Form 64E by June 15 and Form 64F by June 30 to tax authorities and investors, respectively, ensuring transparency in income reporting.

Changes to Form No. 10IH and New Forms.

Form No. 10IH in Appendix-II has had certain tax rate references omitted, likely to align with current tax rates, though specific details are not fully clear. Additionally, new forms (64A, 64B, 64E, 64F) replace existing ones, aiming to streamline reporting and simplify compliance for trusts.

Filing Procedures and Legal Basis.

The Principal Director General of Income-tax (Systems) will specify procedures for filing Forms 64A and 64E, including security and archival policies, with certificates downloadable from the web portal. These amendments are enacted under sections 115AD(1A), 115TCA(4), 115UA(4), 115UB(7), and 295 of the Income-tax Act, 1961, with the purpose of enhancing compliance and transparency.

Analysis of CBDT’s Income-tax (Fifth Amendment) Rules, 2025.

The Central Board of Direct Taxes (CBDT) has recently unveiled the Income-tax (Fifth Amendment) Rules, 2025, through Notification No. 17/2025 dated February 24, 2025, marking a significant update to the Income-tax Rules of 1962. This amendment focuses on modifying Rule 12CA and Rule 12CC, introducing new forms for business and securitisation trusts, and adjusting Form No. 10IH.

Given the current date, February 26, 2025, these changes are timely and relevant for trusts navigating the Indian tax landscape. This survey note provides a detailed exploration of these changes, their implications, and the broader context, ensuring a thorough understanding for an Indian audience.

Detailed Changes to Rule 12CA and Rule 12CC.

The amendment replaces Rule 12CA for business trusts, introducing new filing obligations. Business trusts must now file Form 64A with tax authorities by June 15 of the financial year following the previous year, and Form 64B to unit holders by June 30. These forms are designed to provide detailed statements of income distributed, enhancing transparency and accountability.

For instance, a hypothetical business trust, “TrustX,” distributing Rs. 10 crore to its unit holders, would need to ensure Form 64A is filed by June 15, 2026, for the financial year 2025-26, and Form 64B reaches unit holders by June 30, 2026.

Similarly, Rule 12CC is updated for securitisation trusts, requiring Form 64E to be filed with tax authorities by June 15 and Form 64F to investors by June 30. This ensures that investors, such as financial institutions or individuals, receive clear income statements, facilitating accurate tax reporting. For example, a securitisation trust managing pooled assets worth Rs. 50 crore would need to comply with these deadlines, ensuring all income is accounted for and reported correctly.

Amendment to Form No. 10IH.

The changes also involve omitting certain tax rate references from Form No. 10IH in Appendix-II. While specific details are not fully available, this likely reflects updates to align with current tax rates or remove outdated information. Form 10IH, historically used for specific tax declarations, is now streamlined, potentially simplifying the filing process. For instance, if previous versions included references to discontinued tax rates, their removal ensures the form remains relevant for FY 2025-26 and beyond.

Introduction of New Forms.

The notification introduces new forms—64A, 64B, 64E, and 64F—replacing existing ones. This restructuring aims to align reporting requirements with current tax laws, making compliance more efficient. For example, Form 64A and 64B replace older forms for business trusts, while 64E and 64F do the same for securitisation trusts, ensuring consistency and clarity in reporting. This change is particularly beneficial for trusts, reducing administrative burdens and enhancing user-friendliness.

Filing Procedures and Deadlines.

The Principal Director General of Income-tax (Systems) is tasked with detailing procedures for filing Forms 64A and 64E, including security measures, archival and retrieval policies, and certificate generation/download from the web portal. This ensures a secure and efficient filing process, accessible through the official portal at Income Tax Department. Deadlines are strict, with Forms 64A and 64E due by June 15, and Forms 64B and 64F by June 30, emphasizing the need for timely compliance.

Legal Basis and Purpose.

These amendments are enacted under sections 115AD(1A), 115TCA(4), 115UA(4), 115UB(7), and 295 of the Income-tax Act, 1961, providing a robust legal framework. The purpose is to streamline obligations for business and securitisation trusts, enhancing compliance and transparency. This is particularly important in India’s financial sector, where trusts play a significant role, ensuring that income distribution is reported accurately and taxed appropriately.

Implications for Unit Holders and Investors.

The changes have direct implications for unit holders and investors. Unit holders of business trusts will receive Form 64B, providing detailed income statements, aiding in accurate tax return filings and claiming deductions. For example, a unit holder receiving Rs. 5 lakh from a trust can use Form 64B to report this in their ITR, ensuring compliance. Similarly, investors in securitisation trusts will receive Form 64F, enabling them to report income correctly, enhancing transparency and planning.

Summary of New Filing Requirements.

To provide a quick reference, here is a table summarizing the new forms and deadlines:

Conclusion and Recommendations.

The Income-tax (Fifth Amendment) Rules, 2025, introduce significant changes for business and securitisation trusts, effective from the date of publication in the Official Gazette. Trusts must familiarize themselves with these new forms and deadlines to avoid penalties, and consulting tax professionals is advisable for smooth compliance. For further details, refer to the original article at CBDT Income-tax Fifth Amendment Rules 2025 or the official portal at Income Tax Department.

C.K. Gupta

Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.