Comprehensive Overview of Income Tax Form 74 for VCCs and VCFs

Form 74, introduced under the amended framework of the Income Tax Act, 2025, is a critical compliance document for every Venture Capital Company (VCC) and Venture Capital Fund (VCF). It formalises the reporting of income distributed or credited to investors arising from investments in Venture Capital Undertakings and is central to the pass-through tax regime laid down in Section 222.

This guide explains the legal background, scope, procedural aspects, and recent changes relating to Form 74, along with its practical impact on VCCs/VCFs and their investors (unit holders).

Statutory Basis

Form 74 has been designed as part of the transition from the Income-tax Act, 1961 to the Income Tax Act, 2025 and their respective Rules. The key correlations are:

  • **Earlier regime (1961 Act)😗*

    • Statement form: Form 64
    • Governing section: Section 115U
    • Governing rule: Rule 12C of the Income-tax Rules, 1962

  • **Current regime (2025 Act)😗*

    • Statement form: Form 74
    • Governing section: Section 222 of the Income Tax Act, 2025
    • Governing rule: Rule 145 of the Income Tax Rules, 2026

Definitions of VCCs and VCFs, earlier contained in section 10(23FB) of the Income-tax Act, 1961, are now reflected in Note-4 below Schedule V of the Income Tax Act, 2025.

Objective of Form 74

The primary intent behind Form 74 is to implement pass-through taxation for venture capital structures. Under this regime:

  • The VCC/VCF itself is not subjected to income tax on eligible venture capital income.
  • Instead, such income is deemed to accrue directly in the hands of the investors.
  • The income retains its inherent nature (for example, long-term capital gains, short-term capital gains, dividend, or other income) when assessed in the hands of the unit holders.

Form 74 serves as the statutory statement through which the fund/company discloses investor-wise income distributions, enabling the Income Tax Department to cross-verify investor reporting and ensuring correct tax treatment under Section 222.

What Is Form 74 and Who Must File It?

Meaning of Form 74

Form 74 is an annual statement of income distributed or credited by:

  • a Venture Capital Company (VCC), or
  • a Venture Capital Fund (VCF),

to its investors, arising from investments made in Venture Capital Undertakings.

The statement records:

  • aggregate income from eligible investments,
  • its classification under various heads of income, and
  • detailed allocation to each investor.

Persons Obligated to File

The obligation to furnish Form 74 rests with:

  • Every Venture Capital Company or Venture Capital Fund that:
    • is registered with the Securities and Exchange Board of India (SEBI), and
    • has distributed or credited income to its unit holders/investors from investments in Venture Capital Undertakings.

The requirement arises specifically for the purposes of Section 222, as referenced in Note 4 below Schedule V of the Income Tax Act, 2025.

There is no filing requirement under Form 74 where:

  • No income has been distributed or credited during the relevant tax year, or
  • The entity is not covered as a SEBI-registered VCC/VCF under the relevant regulations.

Filing Timelines, Frequency and Mode

Annual Filing Obligation

Form 74 is a once-a-year filing for each VCC/VCF in respect of income distributed or credited during a particular tax year.

  • Period covered:

    • Income relating to a specific tax year that has been paid or credited to investors.

  • Due date for filing:

    • 15th June of the financial year immediately following the tax year in which the income was distributed or credited.

For instance, if a VCF distributes income to investors during the tax year 2024-25:

  • The corresponding Form 74 must be filed on or before 15th June 2025.

E-filing Only – No Offline Facility

Form 74 is exclusively an electronic form. It cannot be filed in physical or paper mode.

  • It must be submitted through the Income Tax e-Filing portal.
  • Filing is required to be done under a valid digital signature of the authorised person of the VCC/VCF.

Note:
The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) is responsible for prescribing the exact electronic procedure and managing the security, archival, and retrieval framework for Form 74 filings.

Information and Structure of Form 74

Form 74 follows a structured data format to ensure uniformity in reporting and easy digitisation. The main segments include: