The rollout of the Income Tax Act, 2025 has brought a major overhaul to India’s tax compliance ecosystem, replacing the decades-old Income-tax Act, 1961, with a simplified and structured framework. Among the various reporting requirements introduced under the new regime, Form 35 has gained attention for taxpayers claiming deductions related to Offshore Banking Units and International Financial Services Centres (IFSCs).
Previously known as Form 10CCF under the Income-tax Rules, 1962, the form has now been redesignated as Form 35 under the Income-tax Rules, 2026, in line with the revised structure of the new tax law.
Form 35 Under Income Tax Act 2025
Form 35 is an accountant-certified report that must be furnished by eligible taxpayers claiming a deduction under Section 147(4)(a) of the Income Tax Act, 2025.
The form is specifically applicable to assessees earning income through:
- Offshore Banking Units (OBUs) located in Special Economic Zones (SEZs), or
- Units operating in International Financial Services Centres (IFSCs).
The report is required to be verified and filed by a Chartered Accountant (CA) and submitted along with the Return of Income (ROI).
Why is Form 35 Important?
The purpose of Form 35 is to enable tax authorities to verify the correctness of deductions claimed on eligible income earned by Offshore Banking Units and IFSC units.
The deduction benefit is allowed only after the required details are furnished in Form 35, making compliance essential for eligible banking institutions.
Who is Required to File Form 35?
Form 35 must be filed by:
- A scheduled bank, or
- A foreign bank
that operates:
- an Offshore Banking Unit in a Special Economic Zone (SEZ) , or
- a Unit in an International Financial Services Centre (IFSC) ,
and claims deduction under Section 147 of the Income Tax Act, 2025.
In simple terms, if an eligible banking entity seeks tax deduction on income from these specialized units, filing Form 35 becomes mandatory.
Form 35 Due Date
The due date for filing Form 35 is linked directly to the Return of Income filing deadline.
Since the form is required to be furnished along with the income tax return, taxpayers must ensure timely submission before or on the applicable ROI due date for the relevant tax year.
Key Details Required in Form 35
The structure of Form 35 broadly includes:
1. Basic Taxpayer Information
- Name of assessee
- PAN details
- Tax Year information
2. Unit Claiming Deduction
- Name and address of the eligible unit
- Details and copy of the permission obtained from regulatory authorities
3. Deduction Computation Details
- First year of deduction claim
- Gross income details
- Income not received in convertible foreign exchange
- Expenses incurred
- Net eligible income
Documents Required for Filing Form 35
Before filing Form 35, taxpayers should keep the following documents and details ready:
- Details of the eligible Offshore Banking Unit or IFSC unit
- Copy of approvals obtained under relevant regulatory laws
- Previous deduction claim information
- Income and expense details for the relevant tax year
- Computation of eligible deduction
Having complete documentation beforehand can help avoid delays and reduce the risk of filing errors.
Step-by-Step Filing Process of Form 35
The filing process for Form 35 involves multiple compliance steps:
- Step 1: Enter details of the eligible unit claiming deduction.
- Step 2: Upload copies of required permissions obtained under applicable laws.
- Step 3: Furnish income, expense and deduction-related information.
- Step 4: Complete verification details.
- Step 5: E-verify the form using the Digital Signature Certificate (DSC) of a Chartered Accountant.
Once processed successfully, the deduction on eligible income from Offshore Banking Units or IFSC units is considered based on the information furnished in Form 35.
Major Changes in Form 35 Under the New Tax Regime
The new version of Form 35 reflects several structural changes introduced under the Income Tax Act, 2025:
- Automatic pre-filling of details like Name, PAN and Tax Year
- Replacement of terms like Assessment Year/Previous Year with Tax Year
- Updated section references aligned with the new law
- Use of the ₹ symbol instead of "Rs."
Conclusion
As India transitions to the Income Tax Act, 2025, compliance reporting formats are also evolving. Form 35 is a crucial reporting requirement for banks and financial institutions operating Offshore Banking Units or IFSC units and claiming tax deductions.
Since the form must be certified by a Chartered Accountant and filed alongside the Return of Income, eligible taxpayers should begin preparations early to ensure smooth and timely compliance under the new tax framework.
CAclubindia
