Form 189 — Infrastructure Bond Approval Application for Public Companies

The Income-tax Act, 2025 provides tax incentives for investments in infrastructure bonds issued by public companies and mutual funds. Under Schedule XV (paragraph 1(z)(i) and (ii)), subscription to eligible issue of capital by public companies or mutual funds qualifies for deduction under section 123. Form 189 is the application form for public companies seeking approval for their infrastructure bond issue. Understanding this form is essential for public companies planning to raise capital through infrastructure bonds.

Overview of Schedule XV

Deduction under Section 123

Section 123 provides for deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, and subscription to certain equity shares or debentures.

Eligible Issue of Capital

Schedule XV (paragraph 6(i)) defines "eligible issue of capital" as:

• An issue made by a public company formed and registered in India
• Or by a public financial institution
• The entire proceeds of the issue are utilised wholly and exclusively for the purposes of any business referred to in section 80-IA(4) of the Income-tax Act, 1961 (infrastructure business)

Subscription to Infrastructure Bonds

Schedule XV (paragraph 1(z)(i)) provides for deduction for subscription to:

• Equity shares or debentures forming part of any eligible issue of capital
• Approved by the Board on an application made by a public company
• In the prescribed form

Approval Requirement

The Board's approval is required for the eligible issue of capital. The application must be made in Form 189.

Form 189 — Infrastructure Bond Approval Application

Purpose

Form 189 is the application form for public companies seeking approval of their infrastructure bond issue as an eligible issue of capital under Schedule XV (paragraph 1(z)(i)).

Filing Details

To Whom

• Central Board of Direct Taxes (CBDT), New Delhi

Timing

• Three months before the eligible issue of capital

Mode

• Electronic filing as specified by the Principal Director General of Income-tax (Systems)

Verification

• By the person authorised to verify the return of income under section 265

Documents to be Attached

• Copy of certificate of incorporation under the Companies Act, 2013
• Audited balance sheet and profit and loss account for three tax years immediately preceding the tax year in which the application is made (or for the period of existence, whichever is lesser)

Line-by-Line Explanation

Part I: Basic Information

1. Name of the Company

   • Full legal name of the public company

2. Corporate Identification Number (CIN)

   • CIN as allotted by the Registrar of Companies

3. Permanent Account Number (PAN)

   • PAN of the company

4. Address

   • Registered office address

5. Date of Incorporation

   • As per Certificate of Incorporation

Part II: Details of Infrastructure Issue

6. Type of Issue

   • Equity shares, debentures, or both

7. Amount of Issue

   • The amount proposed to be raised through the issue

8. Date of Issue

   • The proposed date of the issue

9. Purpose of Issue

   • Infrastructure business for which the proceeds will be utilised

10. Business Referred to in Section 80-IA(4)

    • Description of the infrastructure facility or business

11. Utilisation of Proceeds

    • Details of the proposed utilisation of the proceeds

Part III: Approval and Conditions

12. Approval Sought

    • Approval of the Board for the eligible issue of capital

13. Undertaking

    • That the entire proceeds will be utilised for infrastructure business
    • That the issue will be made in accordance with the conditions

Part IV: Declaration and Verification

14. Declaration

    • That the information furnished is correct
    • That the company will comply with the conditions

15. Signature and Date

    • Signature of the authorised person
    • Date of signing

Conditions for Approval

Investment Requirements

The applicant must invest all its total paid-up capital, raised through equity issue or debentures, in the following manner:

Year 1

• At least 25% of the capital raised shall be invested in the infrastructure facility
• Within one year from the date of approval

Within Three Years

• The rest of the capital shall be invested within three years from the date of approval

Certificate

Every applicant shall submit a certificate from an accountant specifying the amount invested in each tax year, from the date of approval of the Board.

Withdrawal of Approval

The Board shall have the power to withdraw the approval if the applicant:

• Fails to make investments as per the conditions
• Fails to file the certificate

Practical Considerations

Timing of Application

The application must be made three months before the eligible issue of capital. This allows sufficient time for the Board to process the application.

Documentation

The applicant must provide all necessary documents, including:

• Copy of certificate of incorporation
• Audited financial statements

Investment Schedule

The applicant must plan the investment schedule to ensure compliance with the 25% and full investment requirements.

Certificate from Accountant

The certificate from an accountant is required for each tax year to confirm the amount invested.

Withdrawal of Approval

The applicant must ensure compliance with all conditions to avoid withdrawal of approval.

Common Mistakes

1. Late Application

   • Application not filed three months before the issue

2. Incomplete Documentation

   • Missing required documents

3. Failure to Invest

   • Not investing the required amount within the prescribed period

4. Failure to File Certificate

   • Not filing the accountant's certificate

5. Non-Compliance with Conditions

   • Not complying with the conditions of approval

Penalties for Non-Compliance

• Withdrawal of approval: Loss of tax benefits for subscribers
• Potential penalties under the Act for non-compliance

Expert Advisory

Given the complexity of infrastructure bond approval and the importance of compliance, professional advisory is essential. Anuj Desai & Associates provides comprehensive services for infrastructure bond approval, including:

• Eligibility Assessment: Determining eligibility for approval
• Application Preparation: Preparation of Form 189
• Documentation: Compilation of required documents
• Compliance Review: Review of compliance with conditions
• Representation: Representation before the Board

With deep expertise in infrastructure financing and tax incentives, Anuj Desai & Associates ensures that your infrastructure bond issue is approved and compliant.

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Need expert assistance with infrastructure bond approval or Form 189? Contact Anuj Desai & Associates today for comprehensive advisory, application, and compliance services. [Contact Us] to schedule a consultation.