Income Tax Form 23: Notification of Skill Development Project (Section 47(1)(b))

Form 23 is a notification issued by the CBDT under section 47(1)(b) of the Income-tax Act, 2025 for approved skill development projects, following approval of Form 22 and recommendation by NCVET. It formally recognizes the project in the Official Gazette and specifies key details such as project scope, duration, approved tax years, expenditure limits, and conditions for compliance. The notification is generally valid for up to three tax years and enables the assessee to claim tax benefits linked to the project. Once issued, Form 23 cannot be revised or withdrawn except through revocation proceedings. Post-notification, the company must maintain separate books, ensure audit compliance, and adhere strictly to prescribed conditions. Non-compliance, such as failure to maintain accounts or violation of conditions, may lead to revocation of approval. Thus, Form 23 ensures transparency, regulatory oversight, and accountability in granting and monitoring tax incentives for skill development projects.

FAQ’s pertaining to Income Tax Form 23: Form for notification of skill development project under section 47(1)(b) of Income Tax Act, 2025

Notification format for Skill Development Project under Section 47(1)(b) of the Income- tax Act, 2025

 Q1. What is Form 23?

Ans: Form 23 is an Income tax notification form issued for an approved skill development project under Section 47(1)(b) of the Income-tax Act, 2025, pursuant to approval granted under Rule 39.

Q2. What is the purpose of Form 23? Ans: The primary purpose of Form 23 is to:

• Notify an approved skill development project in the Official Gazette.
• Specify the Tax Year(s) for which the project is approved.
• Lay down the terms, conditions, duration, and expenditure limits applicable to the project.
• Enable tax benefits linked to approved skill development projects under Section 47(1)(b).

Q3. Who issues Form 23?

Ans: Form 23 is issued by the Central Board of Direct Taxes (CBDT) after receipt of recommendation from the National Council for Vocational Education and Training (NCVET) and satisfaction that the project meets conditions prescribed under Rule 39.

Q4. When is Form 23 issued?

Ans: Form 23 is issued after Form 22 is examined and approved, and the project qualifies for notification under Section 47(1)(b) of the Income-tax Act, 2025.

Q5. What details are contained in Form 23?

Ans: Form 23 contains:

• Name, address, and PAN of the company.
• Reference number and date of application.
• Title and purpose of the skill development project.
• Details of the training institute.
• Date of commencement and duration of the project.
• Approved Tax Year(s).
• Estimated total project expenditure (excluding land/building).
• Specific conditions imposed on the project.

Q6. Which skill development projects are eligible to be notified under Form 23?

Ans: A project is eligible if:

• It is undertaken by an eligible company.
• It is implemented in a separate facility in a training institute.
• It complies with Rule 39 and Rule 40.
• It meets statutory conditions under Section 47(1)(b) of the Income-tax Act, 2025.

Q7. For how long is a skill development project notified under Form 23?

Ans: The project may be notified for a period not exceeding three Tax Years, as specified in the notification.

Q8. Can the notification under Form 23 be extended?

Ans: Yes. The Board may notify the project for a further period in consultation with NCVET, subject to satisfactory compliance.

Q9. What happens after Form 23 is issued?

Ans: After issuance:

> The notification is communicated to:

• • The applicant
  • The training institute
  • NCVET
  • The jurisdictional Commissioner of Income-tax

> The company must comply with conditions under Rule 40.

Q10. Can Form 23 be revised or withdrawn?

Ans: No. Once Form 23 is issued and notified, it cannot be revised or withdrawn, except through revocation proceedings under Rule 39.

Q11. Under what circumstances can a Form 23 notification be revoked?

Ans: Notification may be revoked if:

• The company or training institute ceases activities.
• Project activities are not genuine.
• Separate books of account are not maintained.
• Audit requirements under Rule 40 are not complied with.
• Conditions of notification are violated.

Q12. What compliance obligations apply after Form 23 is issued?

Ans: The company must:

• Maintain separate books of account for the project.
• Get accounts audited by an accountant.
• Furnish audited project statements on or before the due date under Section 263(1).
• Ensure expenses claimed qualify under Section 47(1)(b).

Q13. Is any information in Form 23 auto-filled?

Ans: Yes. Some fields may be auto-populated based on Form 22 and departmental records.

Q14. How is Form 23 authenticated and verified?

Ans: Form 23 is authenticated through:

• Authorized CBDT officer’s signature.
• Official issuance under Section 47(1)(b).

Q15. When are UDIN and FRN applicable in relation to Form 23?

Ans:

• UDIN (Unique Document Identification Number): Where an audit or certification of an Accountant as defined in the Section 515(3)(b) of the Act is required under Rule 40, a UDIN must be generated and quoted.
• FRN (Firm Registration Number): If audit or certification is issued by an audit firm, the Firm Registration Number (FRN) must be disclosed.
• DSC (Digital Signature Certificate): A valid DSC is required for electronic submission of related audit reports or compliance filings.

Q16. What are common reasons for cancellation of Form 23 notification?

Ans:

• Non-maintenance of separate books.
• Failure to submit audit report.
• Non-genuine project activities.
• Violation of notification conditions.
• Failure to exclude reimbursed or reimbursable expenditure from the project cost.
• Non-compliance with Rule 39 / Rule 40.

Q17. What is the objective of Form 23 under the Income-tax Act, 2025?

Ans: Form 23 ensures:

• Formal Government notification of approved skill development projects.
• Transparent disclosure of project scope, duration, and financial limits.
• Effective monitoring, audit, and accountability.
• Standardized implementation of Section 47(1)(b) under the Income-tax Act, 2025.

Guidance Notes

Guidance Note on Form 23

Form 23 is an Income-tax notification form issued for an approved Skill Development Project under Section 47(1)(b) of the Income-tax Act, 2025, in accordance with Rule 39 and Rule 40. This Form is issued by the Central Board of Direct Taxes (CBDT) to formally notify an approved skill development project in the Official Gazette.

Purpose of Form 23

The primary purpose of Form 23 is to:

• Notify an approved Skill Development Project under Section 47(1)(b) of the Income- tax Act, 2025.
• Specify the Tax Year(s) for which the project is approved.
• Record key project particulars, including title, purpose, training institute details, duration, and approved expenditure.
• Lay down terms and conditions subject to which the project remains notified.
• Enable tax benefits linked to approved skill development projects.

Issuance Requirements

• Who issues Form 23: Form 23 is issued by the CBDT, after an eligible company’s application in Form 22 is examined and recommended by the National Council for Vocational Education and Training (NCVET) under Rule 39.
• When Form 23 is issued: Form 23 is issued when:
  • The project satisfies conditions under Rule 39 and Rule 40, and
  • The Board approves notification under Section 47(1)(b) of the Income-tax Act, 2025.
• The notification is valid for a period not exceeding three Tax Years.

How Form 23 is authenticated

Form 23 is authenticated through:

• Signature of the authorized CBDT officer, and
• Publication in the Official Gazette.

Information Contained in Form 23

The Form contains the following key details:

• Particulars of the Company
  • Name
  • PAN
  • Address
  • Reference number of application
  • Date of application
• Details of the Skill Development Project
  • Title of the project
  • Purpose of the project
  • Name and address of the training institute
  • Date of commencement
  • Duration in months
  • Approved Tax Year(s)
  • Total expected expenditure (excluding land/building)
  • Conditions subject to which the project is notified

Frequency and Validity Period

• Frequency: Form 23 is not filed by the assessee. It is issued once per approved project, or upon renewal of notification.
• Validity Period: Notification under Form 23 is valid for up to three Tax Years, unless extended or revoked.

Compliance Obligations After Notification

After issuance of Form 23, the eligible company must:

• Maintain separate books of account for the project
• Get project accounts audited by an accountant under Rule 40
• Furnish audited statements and audit report on or before the due date under Section 263(1) of the Income-tax Act, 2025
• Ensure expenses claimed are wholly and exclusively for the notified project
• Comply with all notification conditions
• Ensure project activities remain genuine and in accordance with law

Renewal of Notification

If satisfied with project performance, the Board may extend notification for a further period not exceeding three Tax Years, in consultation with NCVET, as per Rule 39.

Revocation of Notification

Notification under Form 23 may be revoked if:

• The company or training institute ceases activities
• Project activities are not genuine
• Separate books of account are not maintained
• Audit or reporting requirements are not complied with
• Conditions of notification are violated
• Statutory provisions under Rule 39 or Rule 40 are breached

Revocation is carried out after giving the assessee an opportunity of being heard.

Communication of Notification

A copy of Form 23 is communicated to:

• The applicant
• The training institute
• NCVET
• Jurisdictional Commissioner of Income-tax

UDIN, FRN and DSC Requirements

• UDIN (Unique Document Identification Number): Where a Chartered Accountant certifies or audits project accounts, a UDIN must be generated and quoted in the audit or certification.
• FRN (Firm Registration Number): If certification or audit is issued by an audit firm, the Firm Registration Number (FRN) must be mentioned.
• DSC (Digital Signature Certificate): A valid DSC is required where related filings, audit reports, or submissions are made electronically.

Key Points to Note

• Form 23 is a notification form, not an application form.
• It is issued only after approval of Form 22.
• Notification applies only for specified Tax Year(s).
• Only eligible companies under Rule 40 qualify.
• Projects must be carried out in recognized training institutes.
• Expenditure must exclude cost of land and building and any expenditure on the project that is reimbursed or reimbursable to the assessee by any person, whether directly or indirectly.
• “Tax Year” terminology replaces earlier year references.
• Continuous compliance is required to avoid revocation.

Outcome Details

• Project Recognition: Form 23 grants formal Government recognition to an approved Skill Development Project.
• Continuation or Cancellation:
  • Compliant projects may be renewed
  • Non-compliant projects may face revocation of notification

Challenges and Solutions

The revised Form 23 framework supports improved governance through:

• Standardized project disclosures
• Transparent approval conditions
• Audit-backed accountability
• Digital monitoring and verification
• Structured linkage between approval (Form 22) and notification (Form 23)

Common Changes Across Forms

• Assessment / Previous Year replaced with Tax Year
• Updated statutory references to the Income-tax Act, 2025
• Enhanced audit, UDIN, FRN, and DSC integration
• Improved digital compliance and structured reporting