Tax Holiday- Deduction : [Section-80IC]

Deduction in respect of Profits and Gains of Certain Undertaking or Enterprises in certain Special Category States. [Section 80-IC]

Provisions pertaining to section 80-IC are given in brief –

Conditions – The following conditions should be satisfied –

  1. The industrial undertaking is not formed by splitting up, or the reconstruction, of a business already in existence.
  2. The industrial undertaking should be set up in Sikkim, Himachal Pradesh, Uttaranchal or in North Eastern State.
  3. It should manufacture any article but other than those given in the Thirteenth Schedule if it is situated in the industrial zone of the relevant State. In other remaining area, it can manufacture any article given in the Fourteenth Schedule.
  4. Deduction is available in the case of new industrial undertaking or in the case of completion of substantial expansion of an existing undertaking. These activities should take place in the case of Sikkim during December 23, 2002 and March 31, 2007, in the case of Himachal Pradesh or Uttaranchal during January 7, 2003 and March 31, 2012 and North Eastern State during December 24, 1997 and March 31, 2007.
  5. Deduction should be claimed in the return of income. Return of income should be submitted on or before the due date of submission of return of income. Books of account should be audited and audit report should be submitted electronically.

Amount of Deduction under Section 80-IC –

100% deduction is available for the first 10 years

[however, in the case of Himachal Pradesh or Uttaranchal, it is 100% for the first 5 years and 30% (25% in the case of noncorporate assessee) for the next 5 years].