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Deductions in respect of certain Incomes

8.2.      DEDUCTIONS IN RESPECT OF CERTAIN INCOMES :

8.2.1.   Deductions In Respect Of Profits And Gains From Industrial Undertakings Or Enterprises Engaged In Infrastructure Development. [Sec. 80 IA]

This section applies to-

(i)         any enterprise carrying on the business of (i) developing or (ii)  operating and maintaining or (iii) developing, operating and maintaining] any infrastructure facility which fulfils all the following conditions, namely :-

(a) it is owned by a company registered in India.

(b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility;

(c) It should start Operation on or after April 1, 1995.

(d) Return of Income should be submitted on or before due date of submission of return of income.

(ii)        If all the aforesaid conditions are satisfied , then 100% of the Profit is deductible for 10 years.

8.2.2.   Deductions In Respect Of Profits And Gains From Industrial Undertakings Or Enterprises Engaged In Development of Special Economic Zone.   [Sec. 80 IAB]

Where the gross total income of an assessee, being a Developer, includes any profits and gains derived by an undertaking or an enterprise from any business of developing a Special Economic Zone, notified on or after the 1st day of April, 2005 under the Special Economic Zone Act, 2005, there shall be allowed a deduction of an amount equal to :

-           One hundred per cent (100%) of the profits and gains derived from such business for (10) ten consecutive assessment years out of (15) fifteen years beginning from the year in which a Special Economic Zone has been notified by the Central Government:

8.2.3.   Deduction In Respect Of Profits And Gains From Certain Industrial Undertakings Other Than Infrastructure Development Undertaking         [Sec. 80-IB]

Deduction u/s 80-IB is available to different industrial undertaking as follows ---

    1. Operation of Ship
    2. Hotels
    3. Industrial Research
    4. Production of Mineral Oil
    5. Developing and building housing projects.
    6. The business of processing, preservation and packing of fruits or vegetables or integrated, handling, storage and transportation of food grain units.
    7. Multiplex theater
    8. Convention Center
    9. Operating and maintaining a hospital in rural area.
    10. Hospital located in certain areas ( applicable from 2009-10)

Amount of Deductions :

 

Small scale industrial undertaking

Industrial Undertaking ( set up in an industrial backward state)

Industrial Undertaking ( set up in Category A notified backwards District)

Industrial Undertaking ( set up in Category B notified backwards District)

Cold chain facility for agriculture produce

Any other.

Time Limit ( or commencement of  production and operation)

Between April,1, 1991 and March,31 2002.

Between April,1, 1993and March,31 2004

Between October, 1 1994 and March,31 2004.

Between October, 1 1994 and March,31 2004.

Between April , 1 1999 and March,31 2004.

Between April, 1 1991 and March,31 2005.

Amount of Deductions:

 

 

 

 

 

 

1. Owned by a Company

30% of the First 10 Year

100% for First 5 Years and 30% for next 5 years.

100% for First 5 Years and 30% for next 5 years.

100% for First 3 Years and 30% for next 5 years.

100% for First 5 Years and 30% for next 5 years.

30% for first 10 years

2.  Owned by a Co-operative Society

25% of the First  12 Year

100% for First 5 Years and 25% for next 7 years.

100% for First 5 Years and 25% for next 7 years.

100% for First 3 Years and 25% for next 9 years.

100% for First 5 Years and 25% for next 7 years.

25% for first 12 years

 

3. Owned by any other person

25% of the First 10 Year

100% for First 5 Years and 25% for next 5 years.

100% for First 5 Years and 25% for next 5 years.

100% for First 3 Years and 25% for next 5 years.

 

100% for First 5 Years and 25% for next 5 years.

25% for first 10 years

8.2.4.   Special Provisions In Respect Of Certain Undertakings Or Enterprises In Certain Special Category States. [ Sec. 80-IC ]

Deduction u/s 80-IC  is available as under : -

State in which the Industrial undertaking is set up

Time Limit for commencement of production or substantial expansion

Amount deductible

Sikkim

December 23, 2002 to March 31, 2007.

100% of profit and gain for 10 years commencing from the initial asset.

Himachal Pradesh or Uttaranchal

January 7, 2003 to March 31, 2012.

100% of profit and gain for the first 5 years commencing with the initial assessment year and 25% (30% in the case of a company) for the next 5 years.

North-Eastern State ( i.e. Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura)

December 24, 1997 to March 31, 2007.

100%  of Profit and gain of industrial undertaking for 10 years commencing from the initial assessment year.

8.2.5.   Deduction In The Case Of Hotels And Convention Center In NCR    [ Sec. 80-ID]

Section 80-ID has been inserted with effect from the assessment year 2008-2009. 100% of the Profit and Gains derived from the aforesaid business is Deductible for 5 consecutive assessment years beginning from the initial assessment year.

8.2.6.   Deduction In Respect Of Certain Undertaking In North-Eastern States [ Sec. 80-IE].

Section 80-IE has been inserted with effect from the assessment year 2008-2009. 100% of profit and gains shall be deductible for 10 years beginning with the assessment year relevant to the previous year in which the under taking begin to manufacture / produce article or things or complete substantial expansion.

8.2.7.   Deduction In Respect Of Profit And Gains From Business Of Collecting And Processing Of Bio-Degradable Waste.
[ Sec. 80-JJA]

Where the gross total income of an assessee includes any profits and gains from the business of collecting and processing or treating of bio-degradable waste for generating power, or producing bio-fertilizers, bio pesticides or other biological agents or for producing bio-gas or, making pellets or briquettes for fuel or organic manure, there shall be allowed, :

-           a deduction of an amount equal to the whole of such profits and gains for a period of 5 five consecutive assessment years beginning with the assessment year relevant to the previous year in which such business commences.

8.2.8.   Deduction In Respect Of Employment Of New Workmen [ Sec. 80-JJAA]

The amount of deduction is equal to 30% of  “Additional Wages” paid to the new “regular workman” employed by the assessee in the previous  year. The deduction is available for 3 assessment years including the assessment year relevant for the previous year in which such employment is provided.

"additional wages" means the wages paid to the new regular workmen in excess of one hundred workmen employed during the previous year:

"regular workman", does not include-

(a) a casual workman; or

(b) a workman employed through contract labour; or

(c) any other workman employed for a period of less than three hundred days during the previous year;

8.2.9.   Deduction In Respect Of Certain Income Of Offshore Banking Units And International Financial Services Center.
[ Sec. 80-LA]

Where the gross total income of an assessee,— 

(i) being a scheduled bank, or, any bank incorporated by or under the laws of a country outside India; and having an Offshore Banking Unit in a Special Economic Zone; or 

(ii) being a Unit of an International Financial Services Centre

A deduction from such income, of an amount equal to—  

-           (100%) one hundred per cent of such income for five consecutive assessment years beginning with the assessment year relevant to the previous year in which the  permission or registration was obtained, and thereafter; 

-           (50%) fifty per cent. of such income for five next consecutive assessment years.

8.2.10. Deduction In Respect Of Income Of Co-Operative Societies. [ Sec. 80P ]

In the case of a co-operative society , the following amounts are allowed as deductions under this section :


>> The whole of the amount of profits and gains of business attributable to any one or more of such activities :

(i)         carrying on the business of banking or providing credit facilities to its members; or
(ii)        a cottage industry, or
(iii)       the marketing of agricultural produce grown by its mambers, or]
(iv)       the purchase of agricultural implements, seeds, livestock or other  articles intended for agriculture for the purpose of supplying them to its members, or
(v)        the processing, without the aid of power, of the agriculture produce of its members,
(vi)       fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members

>> In the case of a co-operative society engaged in activities other than those specified as above, so much of its profits and gains attributable to such activities as does not exceed,—

(i)         Rs.1,00,000 , where such co-operative society is a consumers' co-operative society, and

(ii)        Rs. 50,000 in any other case.

8.2.11. Deduction In Respect Of Royalty Income, Etc., Of Authors Of Certain Books Other Than Text-Books [ Sec. 80-QQB ]

Where, in the case of an individual resident in India, being an author, the gross total income includes any income, derived by him in the exercise of his profession, in the copyright of any book being a work of literary, artistic or scientific nature, or of royalty or copyright fees (whether receivable in lump sum or otherwise) in respect of such book, there shall be allowed  a deduction as follows :


a.       Rs. 3,00,000 ;  or

b.       Income form Rotalty as stated above,

whichever is less :

8.2.12. Deduction In Respect Of Royalty On Patents [ Sec. 80-RRB ]

Where in the case of an assessee, being an individual, who is—


(a) resident in India;

(b) a patentee;

(c) in receipt of any income by way of royalty in respect of a patent registered on or after the 1st day of April, 2003 under the Patents Act, 1970, and his gross total income of the previous year includes royalty, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, from such income, of an amount equal to :

-           the whole of such income or

-           Rs.3,00,000 (three lakh rupees) ,

whichever is less:

 

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