Form 2 Income Tax Rules 2026 pdf download and Key points
FORM NO. 2
[See rule 7(1)]
Application for notification of a zero coupon bond under section 2(112)
Under the Income-tax Rules, 2026, Form No. 2 is the prescribed application for seeking the notification of a Zero-Coupon Bond (ZCB). It is governed by Section 2(112) of the Income-tax Act, 2025, and Rule 7 of the Income-tax Rules, 2026.
Here are all the key points regarding Form No. 2:
1. Purpose of the Form Form 2 is used to apply to the Central Government to officially notify a bond as a “Zero-Coupon Bond” for tax purposes. This notification is a mandatory pre-condition; only notified ZCBs are eligible for the special tax treatment allowing the discount on the bond to be deductible on a pro-rata basis under Section 32(1)(d). The form enables the government to evaluate if the proposed bond meets statutory conditions relating to tenure, investment commitments, ratings, and listing requirements.
2. Applicability (Who Should File) The form must be filed by an eligible entity proposing to issue a Zero-Coupon Bond. The eligible entities are:
- Infrastructure capital companies
- Infrastructure capital funds
- Infrastructure debt funds
- Public sector companies
3. Frequency and Due Dates
- Issue-Specific: Form 2 is not periodic; it is issue-specific and must be filed separately for each proposed bond issue.
- Advance Filing: It must be filed at least 3 months before the proposed date of the bond issue. It cannot be filed after the bond is issued.
- Time Horizon: Applications cannot be filed for a bond that is planned to be issued beyond two tax years following the tax year of the application.
4. Mode of Filing and Processing
- Online Only: Form 2 and its supporting documents must be filed electronically.
- Authentication: It must be authenticated using a Digital Signature or an Electronic Verification Code (EVC) by an authorized signatory.
- Government Timeline: The Central Government is required to dispose of the application within 6 months of receiving it.
5. Structure of the Form The form is structured into two main parts:
- Part A (Particulars of the Applicant): Captures basic entity information including the Tax Year, Name, PAN, Aadhaar (for individuals), structured Address, and contact details.
- Part B (Bond and Investment Details): Captures the specific terms of the bond, the investment plan, project details, and necessary declarations and undertakings.
6. Mandatory Documents Required The application must be accompanied by relevant attachments, including:
- Certificate of incorporation or registration.
- Trust deed (specifically for funds).
- Detailed Project report.
- Organizational structure.
- Power of Attorney, if applicable.
- Notification copies (such as IDF approvals).
7. Special Conditions and Post-Approval Compliance
- Infrastructure Debt Funds: These entities have an additional special requirement; they must explicitly undertake to maintain a sinking fund for accrued interest, which must be invested in Government securities.
- Follow-up Filing (Form 3): Once the ZCB is successfully notified and issued, the issuer is mandatorily required to file Form 3 annually (within 2 months from the end of each relevant tax year) to report the utilization of the bond proceeds to the government.