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Deduction In Respect Of Certain Undertakings In North Eastern States

[ Deductions Allowed to NRIs in the Computation of Total Income and Tax Payable]

The Finance Act, 2007 has inserted a new Section 801E which provides for deduction from the gross total income of an assessee of an amount equal to 100% for ten Assessment Years. This benefit will be available to any undertaking which had begun or begins, for the period 1 April 2007 and ending before 1st day of April, 2017 in any of the North Eastern States of India with the following activities.

  1. To manufacture or produce any eligible article or things;

  2. To undertake substantial expansion to manufacture or produce any eligible article or things;

  3. To carry on any eligible business

For the purpose of this section North Eastern States of India would mean the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura.This special deduction applies even in respect of substantial expansion which means increase in the investment in plant and machinery by the least twenty-five per cent of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the previous year in which the substantial expansion is undertaken.
The definition of eligible article or things means the article other than the following:

  1. Goods falling under Chapter 24 of the First Schedule of the Central Excise Tariff Act, 1985, which pertains to tobacco and manufactured substitutes;

  2. Pan masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985;

  3. Plastic carry bags of less than 20 microns as specified by the Ministry of Environment and Forests vide Notification Number S.O. 705(E), dated 2 September 1999 and S.O. 698(E), dated 17 June 2003, and

  4. Goods falling under Chapter 27 of the First Schedule of the Central Excise Tariff Act, 1985, produced by petroleum oil or gas refineries.

  5. Similarly, eligible business which is entitled to this deduction would mean the business of

  6. Hotel (not below two star category)

  7. Adventures and leisure sports including ropeways.

  8. Providing medical and health services in the nature of nursing home with a minimum capacity of twenty-five beds.

  9. Running an old-age home.

  10. Operating vocational training institute for hotel management, catering and food craft entrepreneurship development, nursing and para-medical, civil aviation related training, fashion designing and industrial training.

  11. Running information technology related training centre.

  12. Manufacturing of information technology hardware; and

  13. Bio-technology.

Deductions Allowed to NRIs in the Computation of Total Income and Tax Payable
1.Tax Benefit Regarding Life Insurance Premium, PPF Contributions, Nscs, Tuition Fees, etc.
2. Deduction For Donations To Certain Funds And Charitable Institutions
3. Deduction In Respect Of Profits And Gains From A New Industrial Undertaking Or Infrastructural Facility
4. Five-Year Tax Holiday To Hospitals At Certain Locations Sec. 80-1B (IIC)
5. Tax Holiday To Enterprises Providing Telecommunication Services, Industrial Parks, New Hotels And Having Commercial Production Of Mineral Oil
6. Five Year Tax Holiday For New Industrial Undertakings In Industrially Backward Areas & Districts
7. Liberalisation Of Tax Holiday Provision For Infrastructure, Telecom Services, Power Generation, Special Economic Zones, Industrial Parks, etc. [ Section 80-IA]
8. Ten Year Tax Holiday In Respect Of Certain Undertakings In Himachal Pradesh, Sikkim, Uttaranchal And N.E. States Section 80-IC
9. Five-Year Tax Holiday For Hotels In Districts Having A World Heritage Site Sec. 801D
10. Tax Holiday For Hotel And Convention Centres In NCT Of Delhi And Other Areas Section 801D
11. Deduction’ In Respect Of Medical Insurance Premia Section 80D
12. Additional Deduction For Health Insurance Premium Paid For Parents Section 80D
13. Deduction Of Repayment Of Loan For Higher Studies Section 80E
14. Deduction In Respect Of Certain Undertakings In North Eastern States
15. Other Deductions Like Depreciation, Etc. To Nonresident Indians

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