CBDT has released detailed Frequently Asked Questions (FAQs) on Form 29, a key compliance requirement for amalgamated companies seeking tax benefits under the Income Tax Act, 2025.
Form 29, prescribed under Rule 60 of the Income Tax Rules, 2026, plays a crucial role for companies that have acquired industrial undertakings through amalgamation and wish to claim the benefit of carry forward and set-off of accumulated losses and unabsorbed depreciation.
The FAQs provide much-needed clarity on who needs to file the form, when it must be filed, production benchmarks, verification requirements and the consequences of non-compliance.
What is Form 29?
Form 29 is a certificate required to confirm that an amalgamated company has achieved and maintained the prescribed level of production in industrial undertakings acquired through amalgamation.
This compliance is necessary for availing tax relief under Section 116(4)(b)(iii) of the Income Tax Act, 2025, which permits eligible amalgamated entities to carry forward and set off losses and depreciation of the amalgamating company.
Who Needs to File Form 29?
According to the FAQs, Form 29 is mandatory for every amalgamated company that:
- Has acquired one or more industrial undertakings through amalgamation, and
- Intends to claim tax benefits relating to accumulated losses or unabsorbed depreciation of the amalgamating company.
The government has made it clear that incorrect filing or failure to furnish Form 29 may lead to denial of these tax benefits.
Production Benchmark: The 50% Rule
One of the most significant clarifications concerns the minimum production threshold.
To qualify, an amalgamated company must achieve at least 50% of the installed production capacity of the undertaking acquired through amalgamation. This target must be achieved before the end of four years from the date of amalgamation and maintained up to five years from the date of amalgamation.
The FAQs also clarify that “installed capacity” refers to the production capacity that existed on the date of amalgamation.
Filing Timeline and Frequency
Form 29 is not a one-time compliance requirement.
The certificate must be furnished:
- Along with the return of income for the tax year in which the prescribed production level is first achieved, and
- Along with returns for each subsequent year up to five years from the amalgamation date.
This makes Form 29 a year-specific filing requirement for eligible companies.
Multiple Companies Can Be Covered
A notable update in the redesigned Form 29 is that it now allows reporting details of multiple amalgamating companies in a single form, making the compliance process more streamlined for businesses involved in complex restructuring.
Verification, Documents and Online Filing
The FAQs specify that Form 29 must be signed by the principal officer of the amalgamated company and verified by an accountant as defined under Section 515(3)(b) of the Income Tax Act, 2025.
Companies are expected to maintain supporting documentation such as:
- Books of account
- Production and capacity utilization records
- Installed capacity details as on the amalgamation date
- Records evidencing achievement of prescribed production levels
- Auditor’s supporting documentation
Importantly, Form 29 can only be filed electronically through the Income-tax portal, backed by system validations and digital verification.
What Happens if Production Conditions Are Not Met?
The government has warned that if the prescribed production level is not maintained, the tax benefit under Section 116(4)(b)(iii) may be withdrawn. In some cases, earlier allowances may also become subject to re-computation under applicable law.
However, relief may still be available in genuine cases. The Central Government has the power to relax production levels, timelines, or both where companies demonstrate genuine efforts and circumstances beyond their control.
Why Form 29 Matters
With the introduction of the Income Tax Rules, 2026, Form 29 has emerged as an important safeguard for businesses seeking continuity of tax benefits after amalgamation.
Beyond mere compliance, the form helps establish transparency before tax authorities, reduces litigation risks, and provides documented assurance regarding fulfillment of production-linked conditions. For companies undergoing restructuring, timely and accurate filing of Form 29 could prove critical in preserving valuable tax losses and depreciation benefits.
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