Form 40 Income Tax Rules 2026 pdf download and Key points
FORM NO. 40
[See rule 74]
Exercise of option for relief from taxation in income from retirement benefit account maintained in a notified country under section 158 of the Act
Under the Income-tax Rules, 2026, Form No. 40 replaces the erstwhile Form 10EE. It is governed by Section 158 of the Income-tax Act, 2025 (which replaces the old Section 89A), and Rule 74 of the Income-tax Rules, 2026.
Here are all the key points regarding Form No. 40:
1. Purpose of the Form Form 40 is used by a resident Indian to exercise an option to claim tax relief for income accrued in a foreign retirement benefit account maintained in a “notified country” (presently including the USA, UK, Canada, and Australia). Exercising this option allows the taxpayer to defer the taxation of this income in India until the amount is actually withdrawn or redeemed in the foreign country, thereby preventing double taxation on an accrual basis.
2. Applicability (Who Should File) The form must be filed by a “specified person”, defined as a person resident in India who opened a retirement benefit account in a notified country while they were a resident of that country and a non-resident in India.
- Condition: The option must be exercised for all such retirement benefit accounts maintained by the specified person in the notified country.
3. Irrevocability of the Option A critical rule regarding Form 40 is that the option, once exercised, is irrevocable. It cannot be withdrawn for the tax year in which it is exercised, and it will automatically apply to all subsequent tax years.
4. Frequency and Due Date
- Due Date: The form must be filed electronically on or before the due date for furnishing the income tax return (ITR) under Section 263(1)(c) of the Income-tax Act, 2025, for the relevant tax year.
- Mandatory Nature: Filing a valid Form 40 within the specified time limit is a strict mandatory condition for making an admissible claim for this tax relief.
5. Mode of Filing and Verification
- Electronic Filing: Form 40 must be submitted online through the Income Tax e-Filing portal; offline filing is not permitted.
- Verification: The specified person must make a self-declaration in Part B of the form and e-verify it using either a Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC).
- No Edits Allowed: Once the form is validly submitted and an acknowledgment is generated, it cannot be edited, so taxpayers must ensure all details are correct prior to final submission.
- Mandatory PAN: The form cannot be submitted without a valid Permanent Account Number (PAN).
6. Structure of the Form The form is structured into two main parts:
- Part A (Basic Details): Captures the specified person’s Name, Address, PAN, Email ID, Contact Number, and the relevant Tax Year.
- Part B (Account Details & Declaration): Captures the details of all specified accounts maintained (including account numbers, the notified country, and account balances) and contains the formal declaration where the taxpayer exercises the irrevocable option.
7. Mandatory Documents (Annexures) Required To successfully file Form 40, the following documents must be attached as annexures:
- Annexure A-1: A statement of the specified accounts showing the account numbers, the notified country, and the exact balance in the accounts as on the last date of the financial year prior to the tax year for which the form is submitted.
- Annexure A-2: Documentary evidence (or relevant statutory provisions) demonstrating how the income from the specified account is taxed or is taxable in the notified country.
- Annexure A-3: A computation of income for all prior tax years in which the income from the specified account was already included in the total income, along with a reconciliation statement matching this computation with the return of income for those years.