Form 2 Income Tax Rules 2026 pdf download and Key points
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.
1. What is Form No. 2?
Ans. Form No. 2 is prescribed under rule 7 of the Income-tax Rules for making an application to the Central Government for notification of a Zero Coupon Bond (ZCB). Notification is mandatory for a bond to qualify as a zero coupon bond for tax purposes.
2. Who is required to file Form No. 2?
Ans. Form No. 2 is required to be filed by:
• Infrastructure capital company
• Infrastructure capital fund
• Infrastructure debt fund
• Public sector company
3. Is filing of Form No. 2 mandatory?
Ans. Yes. Filing of Form No. 2 is mandatory to obtain notification of a Zero Coupon Bond.
4. When should Form No. 2 be filed?
Ans. Form No. 2 must be filed at least three months before the proposed date of issue of the bond.
5. How many times can Form No. 2 be filed?
Ans. Form No. 2 is issue-specific and must be filed separately for each proposed issue.
6. Can Form No. 2 be filed after the bond is issued?
Ans. No. It must be filed prior to issuance.
7. What details are required in Form No. 2?
Ans. Details of applicant, bond terms, investment plan, project details, declarations and undertakings.
8. Are supporting documents required?
Ans. Yes. Prescribed annexures such as incorporation documents, project report, and power of attorney must be attached.
9. Is there any special requirement for Infrastructure Debt Funds?
Ans. Yes. They must undertake to maintain a sinking fund for accrued interest invested in Government securities.
10. Can Form No. 2 be filed offline?
Ans. No. It must be filed electronically.
11. Can Form No. 2 be revised after submission?
Ans. Revision is generally not permitted unless enabled by the system.
12. What happens after filing Form No. 2?
Ans. The application is examined by the Central Government and may be approved or rejected.
13. What are the consequences of non-compliance?
Ans. Notification may be withdrawn and tax benefits may be denied.
14. Why is Form No. 2 important?
Ans. It enables notification of Zero Coupon Bonds and access to associated tax benefits.
Form 2 Income Tax Rules 2026 pdf download
Form No.2– Frequently Asked Questions
Guidance Note on Form 2
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