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Deduction In Respect Of Profits And Gains From A New Industrial Undertaking Or Infrastructural Facility

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

Under the provisions of Section 80-IB a partial tax holiday is allowed in respect of the profits and gains of a new industrial undertaking set up on or after 1.4.1991 and before 1.4.1995, or an approved hotel which starts functioning from that date. In the case of companies, 30% of the profits derived from new industrial undertakings, etc., is deductible from the gross total income for a period of ten years; in the case of other assessees (including non-residents) 25% of such profits will be deductible for a like period. The benefit of “tax holiday” is admissible to all small-scale industrial undertakings irrespective of the type of their manufacturing activity. An industrial undertaking is regarded as a small-scale industrial undertaking if the aggregate value of the plant and machinery installed, on the last day of the previous year, for the purpose of the business of the undertaking does not exceed 60 laths. In the case of other industrial undertakings it is allowed only if the new industrial undertaking is not engaged in the production of articles listed in the 11th schedule to the Income Tax Act. There are certain other requirements for the eligibility for this deduction.

A 10-year tax holiday for any enterprise which builds, maintains or operates any infrastructure facility such as roads, highways, express ways, water treatment system, solid waste management, new bridges, airports, inland waterways and inland ports and rapid rail transport systems on BOT or BOOT or similar other basis on or after 1.4.1995 would be allowed under Section 801A. Likewise, SSI industrial units, commencing production on or after 1.4.95 and any time before 31.3.2002 would also be allowed partial tax holiday of 25% or 30% for 10 years out of an initial period of 15 years.

A five-year tax holiday under Section 80-lB of the Income Tax Act, 1961, to approved companies engaged in scientific and industrial research and development activities on commercial lines is allowed. This incentive shall be available to any company that has as its main objective, activities in the areas of scientific and industrial research and development and which has been accorded approval by the prescribed authority, namely, Secretary, Department of Scientific and Industrial Research. This tax holiday shall be available to any company, whether new or existing, which is accorded approval by the aforesaid prescribed authority at any time before 1.4.2007. The 100% deduction for a five- year period, shall commence from the assessment year relevant to the previous year in which the approval by the prescribed authority is accorded to such a company.

The benefit of tax holiday under Section 80-TA, to other infrastructure facilities like water supply projects, irrigation systems, sanitation and sewerage systems has also been extended.

The Finance Act, 2002 had, with effect from the A.Y. 2003-2004, provided the grant of deduction under Section 80-IA(2) to an undertaking which develops and operates or maintains and operates a Special Economic Zone. Besides, separate audit for undertakings claiming deduction under Sections 80-IA and 80-lB has also been made mandatory for companies and co-operative societies.

The deduction allowed at 100% of the profits for ten assessment years of a scientific research and development company would be so allowed even where the approval by the prescribed authority is received before 31.3.2012.

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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