BLOG on Income Tax Management for - AY 2022-23 & 2023-24

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

To whom the Deduction will be Allowed under Section 80-LA:
Income in respect of which Deduction under Section 80-LA will be allowed:
Quantum and Period of of Deduction under Section 80-LA:
Additional Conditions to be satisfied to claim Deduction Under Section 80-LA :

(1) To whom the Deduction will be Allowed under Section 80-LA:

The deduction will be allowed to an assessee:

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
being a Unit of an International Financial Services Centre.

(2) Income in respect of which Deduction under Section 80-LA will be allowed:

The deduction will be allowed on account of the following income included in the gross total income of the assessee: Any income:

from an offshore banking unit in a Special Economic Zone;
from the business, referred to in section 6(1) of the Banking Regulation Act, 1949, with an undertaking located in a Special Economic Zone or any other undertaking which develops, develops and operates or operates and maintains a Special Economic Zone;
from any unit of the International Services Centre from its business for which it has been approved for setting up in such a Centre in a Special Economic Zone.

(3) Quantum and Period of of Deduction under Section 80-LA:

(a) 100% of such income for 5 consecutive assessment years beginning with the assessment year relevant to the previous year in which the permission, under section 23(1)(a) of the Banking Regulation Act, 1949 or permission or registration under the SEBI Act, 1992 or any other relevant law was obtained;

(b) 50% of such income for the next 5 consecutive assessment years.

(4) Additional Conditions to be satisfied to claim Deduction Under Section 80-LA :

No deduction under this section shall be allowed unless the assessee furnishes along with the return of income,—

a report of a chartered accountant in Form No. 10CCF, certifying that the deduction has been correctly claimed in accordance with the provisions of this section; and
a copy of the permission obtained u/s 23(1)(a) of the Banking Regulation Act, 1949 in case of a Offshore Banking Unit.

"Offshore Banking Unit" means a branch of a bank located in a Special Economic Zone and which has obtained the permission under clause (a) of sub-section (1) of section 23 of the Banking Regulation Act, 1949. [Section 2(u) of the Special Economic Zones Act, 2005]
"International Financial Services Centre" means an International Financial Services Centre which has been approved by the Central Government under sub-section (1) of section 18 of the Special Economic Zones Act, 2005. [Section 2(q) of the Special Economic Zones Act, 2005]