Form No. 2 (Old Form No. 5B) under Section 2(112) of the Income-tax Act, 2025 – Application for Notification of Zero Coupon Bonds | Eligibility, Filing Procedure, Documents, Key Differences & FAQs (FY 2026-27)

Form No. 2 (Income-tax Rules, 2026)

(Corresponding to Form No. 5B of the Income-tax Rules, 1962)

Application for Notification of a Zero Coupon Bond under Section 2(112) of the Income-tax Act, 2025

Key Differences

Form No. 2 – Income Tax: How to Fill, PDF Download & Eligibility (FY 2026-27)

Introduction

Form No. 2 is prescribed under the Income-tax Rules, 2026 for making an application to the Central Government for notification of a Zero Coupon Bond under Section 2(112) of the Income-tax Act, 2025.

A Zero Coupon Bond is issued at a discount to its face value and does not provide periodic interest payments. Instead, the investor receives the redemption value on maturity. Notification by the Central Government is a prerequisite for a bond to qualify as a notified Zero Coupon Bond under the Income-tax Act.

Who Can File Form No. 2

Form No. 2 may be filed by eligible entities intending to issue a Zero Coupon Bond requiring notification under the Income-tax Act. These generally include:

• Public Sector Undertakings (PSUs)
• Government Companies
• Infrastructure Finance Companies
• Infrastructure Development Companies
• Financial Institutions
• Scheduled Banks
• Statutory Corporations
• Companies incorporated under the Companies Act proposing to issue Zero Coupon Bonds
• Any other entity specifically permitted under applicable law and Government notifications

Conditions to be Eligible for Filing Form No. 2

An applicant should satisfy the prescribed statutory conditions, including:

• The proposed instrument must qualify as a Zero Coupon Bond within the meaning of Section 2(112).
• The bond should not carry any periodic interest or coupon payment.
• The bond should be issued at a discount to its redemption value.
• The issuer should comply with all conditions prescribed by the Central Government and CBDT.
• Necessary approvals under the Companies Act, SEBI Regulations, RBI Guidelines or other applicable laws should be obtained wherever required.
• Complete particulars relating to the proposed bond issue should accompany the application.
• The applicant should furnish accurate financial and regulatory information supporting the proposed issuance.

Who Cannot File Form No. 2

The following persons are generally not eligible to file this application:

• Individual taxpayers
• Hindu Undivided Families (HUFs)
• Partnership Firms
• Limited Liability Partnerships (unless specifically eligible as issuers)
• Trusts and Societies not authorised to issue notified Zero Coupon Bonds
• Co-operative Societies
• Persons proposing to issue ordinary interest-bearing bonds
• Applicants failing to satisfy the statutory conditions prescribed under the Income-tax Act or Rules

Income Limits – Old Tax Regime vs New Tax Regime

Not Applicable

Form No. 2 is a regulatory application relating to notification of a Zero Coupon Bond and is not linked to the computation of taxable income or the choice of tax regime.

Accordingly:

• No minimum or maximum income limit has been prescribed.
• The Old Tax Regime has no relevance for this form.
• The New Tax Regime has no relevance for this form.
• Eligibility depends solely upon compliance with the statutory requirements governing the issuance of Zero Coupon Bonds.

How to Fill Form No. 2

The applicant should ensure that all particulars are complete, accurate and supported by appropriate documentation.

Step 1 – Applicant Details

Provide:

• Name of the applicant
• Legal constitution
• PAN
• Registered office address
• Contact particulars

Step 2 – Details of Proposed Zero Coupon Bond

Furnish comprehensive particulars regarding:

• Name of the proposed bond
• Face value
• Issue price
• Redemption value
• Maturity period
• Date of redemption
• Total proposed issue size

Step 3 – Purpose of the Issue

Specify the objectives for which the funds proposed to be raised through the bond issue will be utilised.

Step 4 – Regulatory Compliance

Provide details regarding:

• Statutory approvals obtained
• Regulatory permissions
• Compliance with applicable laws governing the issuance of securities

Step 5 – Supporting Documents

Attach all prescribed documents including:

• Board Resolution approving the issue
• Constitutional documents of the applicant
• Draft Information Memorandum or Offer Document
• Audited Financial Statements
• Regulatory approvals
• Any other document prescribed by the CBDT or the Central Government

Step 6 – Verification

The application should be verified and signed by the authorised signatory, certifying that:

• The information furnished is true, complete and correct.
• All statutory conditions have been duly complied with.
• No material information has been suppressed.

Documents Generally Required

The following documents are generally required to accompany Form No. 2:

• Permanent Account Number (PAN)
• Certificate of Incorporation
• Memorandum and Articles of Association (where applicable)
• Board Resolution authorising the bond issue
• Draft Bond Issue Document
• Audited Financial Statements
• Details of the proposed bond structure
• Regulatory approvals
• Declaration regarding statutory compliance
• Any additional document as required by the Central Government or CBDT

Other Matters

Statutory Basis

Form No. 2 is prescribed under the Income-tax Rules, 2026 pursuant to Section 2(112) of the Income-tax Act, 2025 for obtaining notification of a Zero Coupon Bond.

Objective of the Application

The primary objective of the application is to obtain notification from the Central Government so that the proposed bond qualifies as a Notified Zero Coupon Bond under the Income-tax Act and receives the tax treatment applicable to such instruments.

Filing Authority

The application shall be submitted before the authority notified by the Central Government or CBDT in the manner prescribed under the Income-tax Rules, 2026.

Filing Frequency

Form No. 2 is required to be filed only once in respect of a proposed issue of a Zero Coupon Bond for which notification is sought. It is not a recurring compliance form.

Professional Considerations

Before filing Form No. 2, tax professionals and corporate advisors should ensure that:

• The proposed instrument satisfies the statutory definition of a Zero Coupon Bond.
• The structure of the issue complies with applicable tax and securities laws.
• All corporate approvals have been duly obtained.
• Regulatory permissions from the competent authorities have been secured wherever applicable.
• Supporting documents are complete, accurate and internally consistent.
• The proposed issue complies with the applicable provisions of the Income-tax Act, the Companies Act, SEBI Regulations, RBI Guidelines and other relevant regulatory frameworks.

Practical Significance

Notification of a Zero Coupon Bond under Section 2(112) provides legal certainty regarding its tax treatment under the Income-tax Act. Accordingly, applicants should exercise due diligence while preparing the application and ensure full compliance with all prescribed statutory and procedural requirements to avoid delays or rejection of the application.

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