Form 3 Income Tax Rules 2026 pdf download and Key points
FORM NO. 3
[See rule 7(8)]
Certificate of an accountant under rule 7 for entity issuing zero coupon bond
Under the Income-tax Rules, 2026, Form No. 3 serves as the Certificate of an Accountant under Rule 7 for entities issuing Zero Coupon Bonds (ZCBs). 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. 3:
1. Purpose of the Form Form 3 is a mandatory certificate used to report and verify the utilization of funds raised through the issuance of notified Zero Coupon Bonds. It certifies the amount of funds actually invested out of the realized money for each relevant tax year to ensure compliance with minimum investment thresholds, utilization timelines, and the maintenance of a sinking fund (where applicable).
2. Applicability (Who Should File) It must be filed by any eligible entity that issues a Zero Coupon Bond notified by the Central Government. The eligible entities include:
- Infrastructure capital companies
- Infrastructure capital funds
- Infrastructure debt funds (IDFs)
- Public sector companies.
3. Who Certifies the Form The form must be strictly certified by an Accountant, as defined under Section 515(3)(b) of the Income-tax Act, 2025.
4. Frequency and Due Dates
- Frequency: It is an annual form that must be filed for each applicable tax year falling within the statutory investment periods.
- Due Date: It must be filed within two months from the end of the relevant tax year.
5. Statutory Investment Timelines Verified by Form 3 The form verifies whether the entity is adhering to the following investment schedules under Rule 7:
- Infrastructure Capital Companies/Funds: A minimum of 25% of the realization must be invested by the end of the tax year following the year of issue, and the remaining 75% within four tax years thereafter.
- Public Sector Companies: A minimum of 15% must be invested by the end of the tax year following the year of issue, and the remaining 85% within six tax years thereafter.
- Infrastructure Debt Funds (IDFs): In addition to the investment schedules, IDFs must maintain a sinking fund for accrued interest and invest it in Government securities, which this form certifies.
6. Mode of Filing and Process
- Online Only: The form must be filed electronically on the Income-tax portal; it cannot be filed offline.
- Authentication: It must be verified using a Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC).
- UDIN Requirement: The accountant’s certificate must include a Unique Document Identification Number (UDIN).
7. Structure of the Form The revised form is system-aligned and contains the following sections:
- Part A (Particulars of the Issuer): Captures the name, PAN, category of the issuer, Date and Number of the ZCB notification, Date of Issue, and the total amount realized.
- Part B (Details of Investments): A tabular section requiring details of the entities where investments were made, including their PAN/Aadhaar, nature of business, address, and project commencement dates.
- Verification: Contains the accountant’s name, registration number, address, and UDIN.
8. Key Updates in the 2026 Rules The form has been modernized for the digital e-filing system, introducing PAN-based pre-filling, dropdown menus for categories, tax year-wise investment fields (replacing “financial year”), and expandable table layouts for reporting multiple investments.
9. Consequences of Non-Compliance Failure to file Form 3 or accurately fulfill the utilization conditions may result in the withdrawal of the ZCB notification under Rule 7, the loss of associated tax benefits, exposure to reassessment or scrutiny, and adverse impacts on investors holding the bonds.