11. Deductions

8/4/2019 11. Deductions

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DEDUCTIONS

The aggregate amount of deductions u/s 80 C to 80 U cannot exceed gross total incomeafter excluding the following:

- LTCG and STCG- Winning from lotteries, races etc.

- Income referred to under following sections:

115A Tax on dividends, royalty, and technical service fees in the case of foreign

companies.

115AB Tax on income from units purchased in foreign currency or capital gains

arising from the transfer.

115AC Tax on income from bonds or shares purchased in foreign currency or

capital gains arising from the transfer.

115AD Tax on income on foreign institutional investors from securities or capital

gains arising from their transfer.

115BBA Tax on non-resident sportsmen or sports association.

115 D Special provisions for computation of total income of non-residents.

It must be noted that, an assessee can claim deduction only if the gross total income ispositive.

Where an AOP / BOI is entitled for deduction u/s 80 G/GGA/GGC/IA/IB/JJ, a memberthereof cannot claim the same deduction in relation to the share of such member in the

income of the association.

Deductions u/s 80 IA to 80 U is admissible in respect of net income computed under

the provisions of the Act i.e. income arrived after deducting permissible deductions andadjusting the current and brought forward losses.

The aggregate of 80C, 80CCC and 80CCD should not exceed Rs.1,00,000.

Procedure to avail deduction:1. After finding the Gross total income, subtract the deduction u/s 80C, 80CCC, 80

CCD subject to the limit of Rs.1,00,000. [Note that no deduction u/s 80 CCA and

80 CCB is allowed]2. The amount so obtained is the net income of the assessee.

3. Then deductions under other sections are allowed.

SEC. DESCRIPTION PROVISIONS

80 C Life Insurance premia,

deferred annuity,contributions to PF,

subscription to certain equity

shares or debentures

Deduction is available from the Gross total income.

Deduction is available if the assessee makes specifie

investments/ contributions/ deposits/ payments during th

previous year. This is called gross qualifying amount.


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Such investments, deposits, etc. can be made out of taxabl

income or otherwise.

The total gross qualifying amount must be calculated on paymen

basis during the previous year, regardless of the fact that whethethe payments relate to this year pr any earlier year.

Minimum period of holding:Nature of deposit Minimum period of

holding (years)

Unit-linked insurance plan (ULIP) 5

Life insurance premium 2

Cost of purchase/ construction of a

residential house property includingrepayment of the loan.

5

Deposit under Senior citizen scheme 5

Time deposit in post office 5

- If the taxpayer terminates participation in the plans, befor

completing 5 years then such contribution will not bqualified u/s 80 C.

- In respect of deduction already taken in the preceding yearwould be deemed as the income of the taxpayer for the yea

in which the contribution to the plan is terminated.

In the case of an individual, policy must be taken on his own life

spouse or any children (irrespective of his age or marital status

and in case of HUF any member.

Some of the contributions included in the gross qualifyin

amount are:- Life insurance premium [Premium actually paid or 20% o

the sum assured (lesser)]

- NSC 8

- Superannuation fund- Notified annuity plan of LIC

- 15 year PPF

- Notified bonds of NABARD- Units and notified pension scheme of mutual fund and UTI

- ULIP of UTI or LIC mutual fund

- Sum paid (including interest) as subscription to Home loa

account scheme or any notified pension scheme of NHB.- Tuition fees (not including any donations or developmen

fees)

- Securities of a company engaged in new infrastructurfacility

- Cost of purchase/ construction of a residential house propert

including repayment of the loan- Amount deposited under Senior citizen saving scheme

- 5 year time deposit in post office


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There is no ceiling on the amount of contribution under the Act

But for Public Provident Fund, the maximum limit is Rs.70,000.

Accrued interest which is deemed as reinvested is also qualifie

for deduction for first 5 years.

Sum assured does not include any premium agreed to be returneor any benefit by way of bonus.

LIP should be taken for his own life, life of spouse or his chil

only. In case of HUF, any member.

80CCA

National Saving Scheme Deduction is available only for the A.Y. 1988-89 to 1992-93 icase of an individual or a HUF. The assessee would be taxed a

the date of maturity, when he receives the deposit made by him.

The assessee must deposit under the NSS 1987, or under Jeeva

Dhara/ Akshay Plan of LIC.

Any amount standing to the credit of the assessee under the NSwithdrawn/ received, on account of surrender of JD/JA (or a

annuity or bonus) an amount equal to the entire amount receive

by the assessee is deemed to be the income of the assessee of thaperiod.

Where the amount is paid on the death of the assessee to the legaheirs, it will not be taxable in their hands.

Where a HUF has parted then the amount so received by thmembers will be taxable, if the HUF has availed deduction in thprevious years.

80

CCB

Equity Linked

Savings Scheme

Deduction is allowed if investment in the notified ELSS is mad

in the years 1991-92 and 92-93. The assessee would be taxed a

the date of maturity, when he receives the deposit made by him.

In case the assessee receives money due to repurchase by th

Fund or Trust, or on termination of plan, it will be deemed to bhis income in the year of receipt. Same for HUF.

(Repurchase price of units) (Amount invested by assessee) =

Capital Gain, and is taxed accordingly.

80CCC

Pension Fund Taxpayer must be an individual (irrespective of his residentiastatus or citizenship).

He must have deposited a sum under an annuity plan of LIC oIndia or any other insurer for receiving pension.


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The deposit should be made from the income chargeable to ta

(either current years or previous year)

In case the assessee or his nominee surrenders his annuity befor

maturity date, the surrender value shall be taxable in the hands othe assessee or his nominee.

If the assessee or his nominee receives pension after maturitythen the pension will be taxable if he has claimed deduction u/s.

If deduction is claimed u/s 80C for this amount, then deduction

u/s 80CCC will not be allowed.

80CCD

Contribution to a notifiedPension scheme of Central

Govt. or any other employer.

Taxpayer is an individual.

He is employed by the central govt. or by any other employer, o

or after 1st Jan 2004.

He must deposit a sum in his account under the scheme in thprevious year.

No deduction is available in respect of employees contribution i

excess of 10 % of salary. Similarly for the employer

contribution in addition.

If deduction is claimed u/s 80C for this amount, then deduction

u/s 80CCC will not be allowed.

Salary includes DA only (if terms so provide).

If the employee has to his credit a sum in the pension accounand has availed deduction in the earlier years; then, the amoun

received by him (or his nominee) will be taxable on:

- closure of account- surrendering the scheme before maturity

- receipt of pension from the annuity plan.

NOTE:

- The aggregate of 80C, 80CCC and 80CCD should not exceed Rs.1,00,000.- Amount deposited u/s 80 CCA and CCB is NOT deductible [see provisions for

details].- Dependents = spouse, parents, children, bro/sis

80 D Medical Insurance Premia Taxpayer must be an individual or a HUF (irrespective o

residential status or citizenship).

Premium is paid in the accordance with the scheme framed by th

General Insurance corporation of India and approved by th


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Central Govt. the scheme is called mediclaim ins. Policy. Th

amount deposited in similar schemes approved by Ins. Regulatorand Development authority is also considered.

The premium is paid by any mode but not in cash.

It is paid out of the income chargeable to tax.

Policy is taken for:- Assessee, his spouse, parents (not grand-parents) dependen

or not, or dependent children.

- HUF or any member.

Deduction:

- Rs.15,000 for [taxpayer, spouse and dependent children], an

additional Rs.15,000 for parents (if any).

- If the taxpayer or/and his spouse are senior citizen (>65 an

resident in India) then, an additional amount of Rs.5,000 iallowed. Similarly if his parents are senior citizen the

additional Rs.5,000 is allowed.

- Therefore, the maximum deduction allowed in this section. Iall the possibilities are true, will be Rs.40,000 [(15

5)+(15+5)].

80 DD Maintenance including

medical treatment of adisabled dependent.

Resident individual and HUF.

Qualifying sum:

- Expenditure incurred for medical treatment includin

nursing, training and rehabilitation of the disabled dependen- Paid or deposited any amount under the scheme framed bLIC or any other insurer, or the Administrator or th

specified Co. as approved by the Board in this behalf, fo

maintenance.

If the dependent has claimed any deduction u/s 80 U i

computing his total income, then the assessee cannot claimdeduction u/s 80 DD.

Deduction:

- If disability (> 40 %) : Flat 50,000- If severe disability (> 80 %): Flat 75,000

If dependent predeceases the taxpayer, then the amount sdeposited in the scheme will be taxable.

80

DDB

Medical Treatment Taxpayer must be a resident individual or a HUF (irrespective o

citizenship).

Taxpayer has actually incurred expenditure for the medica


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treatment of a specified disease for himself or dependents. In cas

of HUF for members.

The assessee must submit a certificate in the prescribed form

no.10-I from a specialist working in a government hospital (thdoctor may not be employed there).

Deduction:- Rs,40,000 or actual whichever is lower.- In case the assessee or his dependants then Rs.60,00

(instead of Rs.40,000) or actual whichever is lower.

- The amount received from the insurer or any reimbursemenfrom the employer, will be deducted from the amount o

deduction (not expenditure).

80 E Repayment of loan taken for

higher education

The assessee is an individual, taken a loan from a financia

institution or an approved charitable institution.

Loan is taken for the purpose of pursuing higher education i.efull-time studies for any graduate or post-graduate course.

It is taken for his own education or for his spouse or any child.

Amount is paid by the individual during the previous year by waof interest on such loan out of his income chargeable to tax.

Deduction: Entire interest (not principle) is deductible beginninfrom the year in which the assessee starts paying the interest o

the loan and 7 immediately succeeding A.Y. or until the abov

interest is paid in full (earlier).

80 G Donations to certain funds,

charitable institutions.

Donations made in kind are not allowed.

STEP 1:

1. Find the gross total income

2. Then calculate the adjusted gross total income

STEP 2:

1. Find the total donations made. This is the gross qualifyinamount.

2. Then the contributions which are subject not maximumlimit must be noted down as it is. And the contribution

which are subject to maximum limit must be addeaccordingly. [Maximum limit being 10 % of the adjuste

gross total income. This implies that the amount o

donation in these select cases or the maximum limwhichever is lower is added]. This is the net qualifyin

amount.

3. Now, find the amount of deduction. It depends on the %age specified in the list.


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NOTE:Adjusted Gross Total Income the following should be deducted:

- amount deductible u/s 80 C to 80 U (but not 80 G)

- such incomes, on which income tax is not payable

- L.T.C.G- S.T.C.G on transfer of equity shares or units of equity-oriented mutual funds on or

after October 1, 2004.

- Incomes referred to in Sec.115A: Tax on dividends, royalty, and technical service fees in the

case of foreign companies.

Sec.115AB: Tax on income from units purchased in foreign currency orcapital gains arising from the transfer.

Sec. 115AC: Tax on income from bonds or shares purchased in foreign

currency or capital gains arising from the transfer. Sec. 115AD: Tax on income on foreign institutional investors from

securities or capital gains arising from their transfer.

80 GG Rent paid Taxpayer is a self-employed individual.

He is not getting H.R.A. at any time during the P.Y.

The individual, spouse, minor child or HUF (if he is a membe

of it) must not own any residential accommodation at the placwhere the taxpayer resides, performs his duties, or carries on hi

B/P.

If the assessee owns any residential accommodation at any placother than the place of residence or work of the assessee, the

such property should not be assessed in the hands of th

individual as self-occupied property.

The taxpayer must file a declaration in Form no. 10 BA

regarding the expenditure incurred by him towards payment orent.

Deduction: Least of,- Rs.2,000/m

- 25 % of total income- Excess of actual rent paid over 10 % of Adjusted Tota

Income (Refer note above).

To find Adjusted Total Income reduce from gross total income:

- LTCG- STCG taxable u/s 111A at the rate of 10 %.

- Income u/s 115 A

- Amount deductible u/s 80 CCC to 80 U (except 80 GG)


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80 GGA Donations for scientific

research or ruraldevelopment

Assessee is not taxed u/h PGBP.

Sum is paid to an approved scientific research association or a

approved university, college etc for the said purpose.

Sum is paid to an, association or an approved university, college

institution for research in social science and statistics.

An approved association or an undertaking which conducts ruradevelopment programmes, training of persons for implementin

such programmes, and submits a certificate for this.

Sum paid to a public sector Co. or a local authority or a

association approved by the National Committee for carrying ou

any eligible project.

Sum paid to

- National Fund for Rural Development

- National Urban Poverty Eradication Fund

Deduction: Full deductible.

Contribution to these institutions will be qualified for deductioeven if after the date of making contribution, the approva

granted to these institutions have been withdrawn.

80

GGB/C

Contribution to political

parties

Deduction is allowed on the contribution to a political party, bu

not to- Local authority and

- Every artificial judicial person wholly/partly funded by th

government.

80 HHB Profit from projects outside

India

N.A.

80

HHBA

P from housing projects

aided by world bank

N.A.

80 HHC Export Turnover N.A.

80 HHD Earnings in convertible

foreign ex.

N.A.

80 HHE Profit from export of

computer software

N.A.

80 HHF P from export or transfer offilms software

N.A.

80 JJA Profit from business/processing of bio-degradable

waste

Condition: Gross total income must include any profit derivefrom related activities.

Deduction: For the first 5 years the entire profits shall bdeductible starting from the P.Y. in which such busines

commences.

80 JJAA Employment of new Inserted to encourage employment.


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workmen

Taxpayer is an Indian company.

Income of the taxpayer includes any profits derived from an

industrial undertaking engaged in the manufacture of an articlor a thing.

Industrial undertaking is not formed by splitting up oreconstruction/amalgamation of an existing co.

Assessee furnishes along with the return of income the report o

a CA in form no.10 DA

Deduction: 30 % of additional wages paid to the new regula

workmen employed by the assessee in the previous year.

Deduction is allowed for 3 A.Y. only. It starts from the year in

which the regular workman are employed first, and then for th

next 2 A.Y.

NOTE:

Workman: means any person employed in an industry to do any manual, unskilled,skilled, technical, clerical or supervisory work, but excludes the following:

- a person who is in air-force, military or navy, or in police service

- a person who is employed in managerial or administrative capacity- a person who is employed in supervisory capacity and draws wages exceeding

Rs.1600/m

Regular Workmen: excludes- a casual workman

- a workman employed through contract labour

- a workman employed for a period of


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Workman means B + C + D

Regular workman means A

Computing amount of deduction:

A. In case of a new undertaking:-

1. Find whether no. of W employed are > 1002. If yes, find wages paid to new RW in excess of 100 W employed.

B. In case of an existing undertaking:1. Find whether no. of W employed are > 100

2. If yes, find number of RW newly employed during the year and whether itis 10 % of existing no. of W employed in undertaking as on the last day

of the P.Y.

80 L Interest on certain securities,

investments

N.A.

80 LA Certain income of off-shore

banking units andinternational financial

services centre

The assessee is (a) scheduled bank and has a off-shore bankin

unit in a sez (b) a foreign bank and has a off-shore banking unit ia sez (c) a unit of International Financial Services centre

A report from the CA certifying deduction availed u/s

A copy of permission obtained under the provisions of B.R. Act

1949 must be submitted with the return.

Deduction: 100 % of income received in convertible forex i

accordance with the regulations of FEMA is deductible for

consecutive A.Y. beginning with the A.Y. relevant to th previous year in which permission is obtained. And, for th

further next 5 years, 50 % of such income will be deductible.

80 P Income of a co-operative

society

For 100 % deduction the soc. must be engaged in

- Business of banking, of primary agricultural credit society o

primary co-op agricultural and rural development bank.- Marketing of agricultural produce, oil seeds, milk, fruit

vegetables

- Fishing activities- Labour co-op

- Purchase of agricultural implements, livestock etc.

- A cottage industry- The processing without the aid of power of agricultura

produce of its members.

For interest and dividend received from other co-op soc and fowarehousing income, such income of any such soc is full

exempted.

Deductions under this section in respect of business income of

co-operative society shall be available with reference to incom

after claiming deduction u/s 80I and 80 IA.


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Deductions allowed:- 100 % of income for co-op soc. engaged in specified activities.

- Rs.1.00,000 for consumer co-op soc.

- Rs.50,000 for other co-op soc.

80

QQB

Royalty income of authors The taxpayer is an individual resident in India (irrespective o

citizenship and residential status). He must not be a NRI.

He is an author or joint author.

Book authored by him is work of literary, artistic or scientifinature. It must not include diaries, guides, magazines, journals

newspapers, pamphlets, text-books

The gross total income of the taxpayer includes:

- Royalty or copyright fees payable in lump sum or otherwis

in respect of aforesaid book. (Advance payment which is noreturnable is also included)

- Lump sum consideration for transfer (or grant) of aninterest in the copyright of the book.

Furnish form no.10 CCD along with the return.

Deduction: (lower of)- Rs.3,00,000

- Income from royalty

The income earned outside India, is brought in India within

months from the end of the P.Y. (or within extended period a

stated by RBI) is allowed as deduction.

Where the income is not a lump sum consideration, then th

income (before allowing expenses related to this income) i

excess of 15 % of the value of the books sold during the P.Yshall not be taxable [i.e. taxable upto 15% only].

80 R Remuneration from abroad toteachers, prof.

N.A.

80 RR Professional income fromabroad

N.A.

80

RRA

Remuneration received for

services rendered outsideIndia

N.A,

80RRB

Royalty on Patents The taxpayer is an individual resident in India (irrespective ocitizenship and residential status). He must not be a NRI.

He is a patentee or a co-owner of patent. Patentee means thperson (being the true and first inventor), whose name is entere

on the patent register.

He receives royalty on patents, registered under the Patent Ac


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after 31st March 2003. (Advance payment which is not returnabl

is also included)

However, it does not include any consideration for sale of produc

manufactured with the use of patented process or of the patentearticle.

Furnish form no.10 CCE along with the return.

Deduction: (lower of)

- Rs.3,00,000

- Income from royalty

The income earned outside India, is brought in India within

months from the end of the P.Y. (or within extended period astated by RBI) is allowed as deduction. A certificate in this regar

stating that the deduction claimed is correct must be filed.

Subsequent revocation of patent: If the patent is revoked by thHigh Court or Controller, or the name of the assessee is exclude

from the patent register as patentee, in respect of that patent, th

deduction related to the royalty income in respect of the periofor which the patentees claim was not valid, shall be withdrawn

For this purpose the assessment may be rectified within a perio

of 4 years from the end of the previous year in which such ordeis passed.

E.g. The court passes an order in A.Y. 00-01 that the patentee ha

lost his title. The court proceedings took 3 years and finally hlost the right. In the meantime the patentee claimed deduction u/s

The court can withdraw the deduction claimed, and so he woulthen have to pay tax on that amount also. If proceedings took

years, then the court cannot withdraw that sum.

80 U Person with disability The taxpayer is an individual resident in India (irrespective ocitizenship and residential status). He must not be a NRI.

He suffers from > 40 % disability given below:- blindness

- low vision

- leprosy cured

- hearing impairment- locomotors disability

- mental retardation

- mental illness

A certificate from the medical authority must be submitted wit

the return. [Medical authority means any hospital or institutionotified by appropriate Govt.]

Deduction:


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- A fixed deduction of Rs.50,000 is available.

- In case of disability > 80% then Rs.75,000

88 E Securities Transaction Tax N.A.

80 IA:

Profits from industrial undertaking engaged in infrastructural development etc.

CASE 1: Undertaking providing infrastructure facility:

Conditions:1. It should provide infrastructure facility.2. It should be owned by an Indian company (or a group of companies), State Govt,

local authority, or any board or body establisher under the Central or State Act.

3. There should be an agreement with the Central Govt. or a local authority or anyother statutory body for developing, operating and maintaining a new

infrastructural facility.

4. It must is operating and maintaining the infrastructure facility on or after 1st April,1995.

5. Return of income must be submitted in time.

Infrastructure facility means:- a road including toll road, a bridge or a rail system

- a highway project including housing or other activities being an integral part of the

highway project- a water supply project, water treatment system, irrigation project, sanitation and

sewage system or solid waste management system

- a port, airport, inland waterway or inland port or (from AY 2008-09) navigationalchannel in the sea

The undertaking can operate and maintain an infrastructure facility on the basis ofBOTor BOOT:

In case of ports, structures built for storage, loading and unloading etc. will be included in

the definition of ports, if the concerned port authority has issued a certificate that the saidstructures form a part of the port.

Water treatment system constructed will also include any structure built for the treatmentof effluents and its conveyance for disposal.

Deduction:


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If all the conditions are satisfied, then 100 % profit is deductible for 10 years, starting

from the initial A.Y. (but after 31/3/1994).

a. Initial Year: means the A.Y. specified by the assessee at his option to be the initial

year. But it should not fall beyond the 15th A.Y. starting from the P.Y. in which

the enterprise begins operating and maintaining the infrastructure facility.However, the benefit is available for 10 consecutive A.Y falling within a period

15 A.Y.But in the following cases the period allowed is 20 instead of 15:

o a highway project including housing or other activities being an integral part

of the highway project

o a water supply project, water treatment system, irrigation project, sanitation

and sewage system or solid waste management system

b. Housing and other development activities which are integral part of highway:

o The deduction mentioned above, is not applicable in this case.

o Conditions to be satisfied:

Housing and other development activities are integral part of highway

project. Profits are computed in the prescribed manner. If the profit is transferred to a special reserve account, then tax will

not be levied. The amount so deposited must be utilized for highway

project excluding housing and other development activities but before

the expiry of 3 years following the P.Y. in which such amount istransferred.

The amount remaining unutilized shall be chargeable to tax.

80 IC

Profits of certain undertaking in certain special category of States

Conditions:

- 1. Should not be found by splitting up, or reconstruction, of a business already inexistence. [Refer exceptions]

- The machinery or plant used by this new business should also be new. Any transfer

of P/M to a new business is not allowed. Exceptions:1. Second hand machinery from outside India

2. No depreciation under Income tax in India has ever been allowed on the

same.

3. Transfer of old P/M to new undertaking does not exceed 20 % of the totalvalue of the P/M of the new undertaking.

- Industrial undertaking should be set up in certain specified categories of states. It

should be in a specified area also.- The industrial undertaking must manufacture or produce specified goods/articles.

- The industrial undertaking must begin to manufacture or produce within the time-

limit specified below. In the case of an existing unit, substantial expansion shouldtake place during the time-limit given below.


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- The books of account of the taxpayer should be audited and the audit report must be

submitted in a form along with the return, in time. If the return is not submitted in

time, then deduction will not be allowed.

Amount of Deduction:

State in

which theindustrial

undertaking

is set-up

Time-limit for

commencementof production or

substantial

expansion.

Nature of article (if

the undertaking is inan industrial zone) of

relevant State.

Amount deductible.

Sikkim 23/12/2002 to

31/03/07

Any article but other

than those given in

the 13th Schedule[Part A]

100 % of the profit of the

industrial undertaking for 10

years commencing from theinitial A.Y.

HP,Uttaranchal

7/01/03 to31/12/12

"[Part B] 100 % of the profit of theindustrial undertaking for the

1st 5 years commencing with

the initial A.Y. and 25 % (30%in the case of a Co.) for the

next 5 years.

North easternstates

24/12/97 to31/12/07

Ay article can beproduced. No

restriction on nature

of article.

100 % of the profit of theindustrial undertaking for 10

years commencing from the

initial A.Y.

In case an industrial undertaking is not in an industrial zone, then the article to be produced or manufactured or any substantial expansion must be listed in the 14th

Schedule.

Calculating substantial expansion:- Step 1: Find out the book value of P/M (before depreciation) as on the 1st day of the

P.Y. in which substantial expansion takes place.

- Step 2: Find out the amount of investment in P/M during the P.Y.- Step 3: (2) / (1)

If the proportion computed under (3) is 50 % or more, then it is taken as substantial

expansion.

Notified industrial zones for the relevant State are:

- Export Processing Zone

- Industrial Growth Centre- Industrial Estate

- Industrial Park

- Software Technology Park- Industrial Area

- Theme Park


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Initial A.Y. for this purpose means the A.Y. relevant to the P.Y., in which the

undertaking begins to manufacture or produce article or things, or commences operation

or completes substantial expansion.

Provisions related to Adjustment of loss, Computation of profit and the consequences of

merger/demerger, is same as that discussed earlier.

80 ID

Hotels and convention centre in NCR

Conditions:

- Taxpayer is engaged in the business of hotel located in a specified area.Alternatively, he is engaged in the business of building, owning and operating a

convention centre located in specified area.

- The hotel is constructed and has started or starts functioning at any time during April1, 2007 and March 31, 2010.

- Should not be found by splitting up, or reconstruction, of a business already in

existence. [There are exceptions]- The machinery or plant used by this new business should also be new. Any transfer

of P/M to a new business is not allowed. [Refer Exceptions]

- Audit report should be submitted along with the return, in time.

Specified area includes: the following from A.Y. 08-09

- 2/3/4 star hotel

- 2/3/4 star hotel at a World heritage site (from A.Y. 09-10)- Convention centre

Deduction: 100 % of profits are deductible for 5 consecutive years beginning from the

initial A.Y. Initial A.Y. for this purpose means the A.Y. relevant to the previous year inwhich the business of the hotel starts functioning or the P.Y. in which the convention

centre starts operating on a commercial basis.

80 IE

Certain undertakings in North-eastern States

Conditions:

- The taxpayer begins manufacture or production of goods or undertakes expansionduring 2007-17. However, deduction u/s is not available in respect of manufacture or

production of tobacco, pan masasla, plastic bags etc.

- Aforesaid activity takes place in any North-eastern states i.e. Arunachal Pradesh,Assam, Manipur, etc.

- The aforesaid business is not formed by splitting-up, or reconstruction, of a business

already in existence. [There are exceptions]

- The machinery or plant used by this new business should also be new. Any transferof P/M to a new business is not allowed. [Refer Exceptions]

- Audit report should be submitted along with the return, in time.

Deduction:


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- 100 % of profit shall be deductible for 10 years beginning from the A.Y. relevant to

the previous year in which the undertaking begins to manufactures or complete

substantial expansion.[Substantial expansion means increase in the investment in P/M by atleast 25 % of

the book value of P/M, (before taking depreciation in any year) as on the first day of

the previous year in which the substantial expansion is undertaken.]

Deductions from gross total income

Section Individual HUF Firms /

AOP

80 C YES YES -

80 CCA - - -

80 CCB - - -

80 CCC YES - -

80 D YES YES -

80 DD YES YES -

80 DDB YES YES -

80 E YES - -80 G YES YES YES

80 GG YES - -

80 GGA YES YES YES

80 GGB

80 GGC

YES YES YES

80 IA YES YES YES

80 IB YES YES YES

80 IC YES YES YES

80 ID YES YES YES

80 IE YES YES YES

80 JJA YES YES YES80 JJAA - - -

80 L - - -

80 LA - - -

80 P - - -

80 QQB YES - -

80 RRB YES - -

80 U YES - -

Documents

11. Deductions