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Tax Holiday : 100% EXPORT ORIENTED UNDERTAKINS( 100% E.O.U.) [Section-10B]

 

3.         100% Export Oriented Undertakings (100% E.O.U.)

            1.   Conditions to be Satisfied

            2.   Amount of Deduction

            3.   Period of Deduction

            4.   Transfer under a Scheme of Amalgamation or Demerger

 

100% EXPORT ORIENTED UNDERTAKINGS( 100% E.O.U.)

[ Sec - 10B]

A deduction of such profits and gains as are derived by a hundred per cent. export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee:

The Provisions of Sec 10B are given below :---

1.   CONDITIONS TO BE SATISFIED :         

This section applies to any undertaking which fulfils all the following conditions, namely:-

  1. it manufactures or produces any articles or things or computer software;

  2. it is not formed by the splitting up, or the reconstruction, of a business already in existence:

  3. no deduction under this section shall be allowed to an assessee who does not furnish a Return of his Income on or before the due date specified under sub-section (1) of section 139.

  4. Should not be formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking

  5. it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.

  6. This section applies to the undertaking, if the sale proceeds of articles or things or computer software exported out of India are received in, or brought into India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf.

  7. Audit Report should be submitted in Form No. 56G.

2.   AMOUNT OF DEDUCTION :                    

 

If the aforesaid conditions are satisfied , the deduction u/s 10B may be computed as under :

Profit of the Business of the undertaking X Export turnover

Total Turnover of the business

 

For the assessment year beginning on the 1st day of April, 2003, the deduction under this sub-section shall be 90% of the profits and gains derived from the export of such articles or things or computer software

 

3.   PERIOD OF DEDUCTION :          

 

This deduction shall be allowed for a period of 10 consecutive Assessment Years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles, or things or computer software.

 

No deduction under section 10B shall be allowed to any undertaking from the assessment year beginning on the 1st day of April, 2010 and subsequent years.

 

For the removal of doubts, it is hereby declared that the profits and gains derived from on site development of computer software (including services for development of software) outside India shall be deemed to be the profits and gains derived from the export of computer software outside India.

 

4    TRANSFER UNDER A SCHEME OF AMALGAMATION OR DEMERGER :

 

In case an undertaking eligible for deduction under this section is transferred, before the expiry of the specified period, to another Indian company in a scheme of amalgamation or demerger –

(a)        no deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or demerger takes place ; and

 

(b)        the provisions of this section shall apply to the amalgamated or the resulting company as if the amalgamation or demerger had not taken place.

 

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