New Income Tax Form 32: Audit Reports for Deductions Under Income-tax Act, 2025, A Comprehensive Guide

The newly notified set of Income Tax Rules, 2026 under the Income-tax Act, 2025 introduces several updated forms, including Form 32. This form is prescribed for furnishing the audit report by assessees claiming specified profit-linked deductions under the new Act.

Form 32 replaces the erstwhile Form 10CCB that existed under the Income-tax Rules, 1962.

Form 32 and its Purpose

Form 32 is a mandatory filing for any assessee seeking to claim deductions under Sections 46, 138, 139, 140, 141, 142, 143, or 144 of the Income-tax Act, 2025. Previously, it was covered under Sections 35AD, 80-IA, 80-IAB, 80IAC(4), 80-IB, 80-IBA, 80-IE, 10AA of Income Tax Act, 1961.

The objective of the form is to provide a verified audit report that justifies the deduction claims based on the specific criteria of each section. The form is to be verified by a Chartered accountant.

Who should file Form 32?

The obligation to file Form 32 falls upon assessees who meet the criteria for the following specific deductions:

• ●Section 46: Assessees claiming deductions on capital expenditure incurred in a "specified business".
• ●Section 138: Enterprises or industrial undertakings engaged in infrastructure development claiming deductions on profits and gains.
• ●Section 139: Undertakings or enterprises engaged in the development of Special Economic Zones (SEZs).
• ●Section 140: Eligible start-ups earning profits and gains from an eligible business.
• ●Section 141: Industrial undertakings (other than infrastructure) involved in activities like oil refining or commercial production of gas.
• ●Section 142: Assessees claiming deductions from profits and gains derived from housing projects.
• ●Section 143: Undertakings located in North-Eastern states (Arunachal Pradesh, Assam, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, or Sikkim).
• ●Section 144: Newly established units in SEZs claiming deductions on profits and gains.

Filing Deadlines and Process

Due Date

Form 32 must be filed before the due date specified in Section 63 of the Income-tax Act, 2025. This date corresponds with the general deadline for filing audit reports.

Step-by-Step Process Flow

1. Enter the assessee's name, PAN, Tax Year, and address. Note that many of these details are pre-filled but remain editable.
2. Choose the relevant section (e.g., Section 46 or Section 140) from a drop-down menu.
3. The form will automatically display the specific parts required for the selected section.
4. Enter the entity-specific and deduction-related details.
5. Complete the verification details.
6. The Form must be e-verified using the Digital Signature Certificate (DSC) of the Chartered Accountant.

Detailed Requirements by Section

Section 46

• ●Deductions are not allowed for expenditure on land, goodwill, or financial instruments.
• Payments exceeding Rs. 10,000 in a single day via cash are not eligible for deduction.
• Expenditure incurred before operations start is allowed in the year operations begin, provided it is capitalized in the books of accounts.
• ●Assets must be used for the specified business for at least 8 years. If used for other purposes before this, the expenditure (minus allowable depreciation) is treated as taxable income.

Section 138

• Date of incorporation, Date of commencement of operation
• For infrastructure facility - Nature of infrastructure facility, first year of deduction claim
• For generation, transmission or distribution of power - Year in which undertaking has started generating power, Year in which new transmission and distribution lines were laid, Year of renovation (if applicable)
• Initial tax year of deduction claim
• Total sales of the undertaking, profits and gains from eligible business
• Amount of deduction claimed

Section 139

• Details of SEZ
• Date of notification of SEZ
• Copy of notification
• Date of start of development of SEZ
• Initial tax year of deduction claim
• Total sales of undertaking
• profits and gains from eligible business
• Amount of deduction claimed.

Section 140

To claim deductions under this section, a start-up must meet the following criteria:

• ●Must be a company or LLP incorporated between 01.04.2016 and 01.04.2030.
• ●Total turnover must not exceed Rs. 100 crore in the year the deduction is claimed.
• Must hold a certificate from the Inter-Ministerial Board of Certification.
• Must be engaged in innovation, development, or improvement of products/services, or a scalable model with high employment/wealth creation potential.
• Deductions can be claimed for 3 consecutive tax years out of the first ten years since incorporation.

Section 141

• Name of the housing project
• Nature of business
• Approval and Completion details
• Project details
• Initial tax year of deduction claim

Section 142

• Name of the housing project
• Nature of business
• Approval and Completion details
• Project details
• Initial tax year of deduction claim
• Total sales of undertaking, profits and gains from eligible business
• Amount of deduction claimed.
• Hotels (2-star and above).
• Adventure/leisure sports (including ropeways).
• Nursing homes (minimum 25 beds).
• Old-age homes and vocational training institutes.
• IT-related training, hardware manufacturing, and biotechnology.

Section 143

Eligible businesses in North-Eastern states include:

Section 144

This section requires detailed reporting on export activities:

• ●Details of export proceeds received in convertible foreign exchange.
• Funds must be brought into India within 6 months of the end of the tax year (unless extended).
• Documentation of sale proceeds credited to separate foreign accounts with RBI permission

Key Documentation

Assessees must prepare the following information and documents for the audit:

1. Copies of agreements with Central/State governments or local authorities.
2. Official notifications for SEZ-based claims.
3. Inter-Ministerial Board certificates for start-ups.
4. Accurate turnover and profit details for the eligible entity.
5. Specific details of capital expenditure (amount, mode, and date) for Section 46 claims.

Key Changes in the 2025/2026 Act/Rules

The transition to Form 32 under the I.T. Rules, 2026, introduced several terminology and formatting updates:

• ●Tax Year: The terms "Assessment Year," "Financial Year," or "Previous Year" have been unified into "Tax Year".
• ●Form Consolidation: Form 32 now acts as the "New Form" corresponding to the old Form 10CCB and Rule 18BBB

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