TaxTMI 
TaxTMI 
Guidance Note - Form 5
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....uidance Note - Form 5<BR>Income Tax<BR>Dated:- 24-3-2026<BR><BR>Guidance Note on Form 5 Form 5 is an Income-tax Form used by an assessee claiming deduction for preliminary expenses under Section 44(3) of the Income-tax Act, 2025, and is required to be furnished as a statement of particulars in accordance with Rule 27. Purpose of Form 5 The primary purpose of filing Form 5 is to: â....
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....€¢ Furnish a statement of preliminary expenses incurred in connection with setting up or extension of business • Support claims of deduction under Section 44(2)(a) of the Income-tax Act, 2025 • Provide transaction-level disclosure of qualifying project and feasibility expenditure • Enable audit trail, verification, and compliance monitoring • ....
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....Strengthen transparency, accountability, and revenue safeguards Filing Requirements (i) Who can file: Any assessee claiming deduction under Section 44 of the Income-tax Act, 2025, including: • Individuals • Firms • Companies • Trusts • Other eligible persons (ii) Who must furnish the Form: Form 5 is furnished by ....
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....the assessee or authorized signatory and does not require accountant certification, unlike Form FN 006 [3AE]. (iii) When to file: Form 5 must be furnished one month prior to the due date for filing the return of income for the relevant Tax Year, as prescribed under Section 263(1). (iv) How to file: The Form must be filed electronically through the Income-tax e-Filing Portal and v....
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....erified using: • Digital Signature Certificate (DSC), or • Electronic Verification Code (EVC) Information Required in Form 5 Part A - Particulars of the Assessee • Name • PAN • Address • Status • Email ID • Contact Number • Tax Year Part B - Details of Preliminary Expenses ....
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.... The Form requires reporting of qualifying preliminary expenses, including: • Preparation of feasibility report • Preparation of project report • Conduct of market or business survey • Engineering services relating to business For each category, the following details must be disclosed: • Nature of activity • Whether....
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.... carried out by the assessee or an external party • Name and PAN of the service provider • Amount paid or credited • TDS applicability and amount deducted (if applicable) If the assessee undertakes the activity itself, "SELF" must be reported. Frequency and Due Date Frequency: Form 5 must be filed for each Tax Year in which deduction under Sect....
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....ion 44 is claimed. Due Date: One month prior to the due date of filing the return of income under Section 263(1). Documents Required Although no attachment is required, the assessee should maintain: • Bills and invoices • Consultant or service provider agreements • Proof of payments • TDS challans and certificates (if applicable) ....
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.... • Accounting records supporting expenditure • Project feasibility and technical reports These may be required for assessment, audit, or verification. Process Flow of Filing • Assessee compiles preliminary expenditure records • Assessee verifies qualifying nature of expenses • Statement is prepared in Form 5 • Form i....
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....s uploaded on the Income-tax e-Filing Portal • Assessee verifies the Form using DSC/EVC • Electronic acknowledgement is generated Integration Note: Form 5 serves as a pre-requisite statement for audit certification in Form 6 Key Points to Note • Filing of Form 5 is mandatory for claiming deduction under Section 44 • Incorrect or incomplete ....
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....reporting may result in disallowance of deduction • PAN and TDS details of service providers must be accurate • Expenses must strictly fall within the scope of Section 44(2)(a) • Multi-vendor activities must be reported separately • Records must be retained for verification and audit Outcome Details Allowability of Deduction: Form 5 f....
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....orms the statutory basis for determining eligibility of preliminary expense deductions. System-Based Verification: Filed data is subject to backend validations, risk filters, and automated compliance checks. Revenue Assurance: Structured reporting strengthens audit trails and reduces dispute risk. Challenges and Compliance Enhancements The revised Form 5 is structured as a ....
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....smart e-Form designed to improve compliance through: • Auto-population of taxpayer master details • Real-time data validation and field controls • Standardization of expenditure classification • Improved integration with audit and deduction workflows Common Changes Across Revised Forms • Use of "Tax Year" instead of Assessment/Pre....
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....vious Year • Updated statutory references under the Income-tax Act, 2025 • Strengthened digital verification mechanisms • Improved data consistency across audit-linked Forms Summary Form 5 is a mandatory electronic compliance statement for taxpayers claiming deduction of preliminary business expenses under Section 44 of the Income-tax Act, 2025. Accurat....
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....e and timely filing ensures deduction eligibility, strengthens audit credibility, and minimizes litigation and compliance risk. =============<BR> News - Press release - PIB....