Section 80IA: Deductions for Gains from Industrial Undertakings

0
97
Section 80IA: Deductions For Gains from Industrial Undertakings

Tax Deductions under Section 80-IA is available to the assessees who are occupied with providing infrastructure development facility. Under this section, the eligible assessee will get a tax deduction on profits under the business head for a specified duration. Some predetermined endeavors are secured. For each eligible undertakings, various conditions, eligible, and measure of deduction given under this section. We should comprehend them in detail.

Now we will understand eligibility, amount of deduction, etc for each undertaking one by one.

UndertakingEligibility ConditionsAmount of Deduction
Infrastructure Facility
An Indian company engaged in infrastructure facility

a) Commencement between April 1, 1995, to April l, 2017.
b) ITR should be filed on time & deduction should be claimed.
c) Audit to be done by a CA.

100% of profit for 10 consecutive A.Y.
Initial A.Y. should start within 15 A.Y. in which assessee starts its operation

Telecommunication services

An undertaking engaged in providing telecommunication services

Commencement between April 1, 1995, to March 31, 2005
ITR should be filed on time & deduction should be claimed
Audit to be done by a CA
It should be a new enterprise



First 5 years = 100% of profit Next 5 years = 30% of profit
*Initial A.Y. should start within 15 A.Y. in which assessee started its operation

Industrial parks or special economic zone

An undertaking which develops and operates an industrial park or special economic zone notified by the central government.

a) Commencement between
For SEZ: April 1997 to March 31, 2005
For Industrial parks: April 1, 2009, to March 31, 2011

b) ITR should be filed on time & deduction should be claimed
c) Audit to be done by a CA
100% of profit for 10 consecutive A.Y. Initial A.Y. should start within 15 A.Y. in which assessee starts its operation

Power generation, transmission, and distribution

An undertaking that is set up in any part of India for the generation or generation & distribution of power.

a) Commencement between
Operation between April 01, 1993, to March 31, 2017.
b) Transmission between April 01, 1999, to March 31, 2017
c) Restoration and Improvement between April 01, 2004, to March 31, 2011.
d) ITR should be filed on time & deduction should be claimed
e) Audit to be done by a CA
It should be a new enterprise (with some exceptions)

100% of profit for 10 consecutive A.Y.
*Initial A.Y. should start within 15 A.Y. in which assessee starts its operation

Reconstruction of a power unit 

An Indian company engaged in up for reconstruction or revival of a power generating plant

a) Formation with majority equity participation before November 30, 2005
b) Operation begins before March 31, 2011
c) ITR should be filed on time & deduction should be claimed
d) Audit to be done by a CA

100% of profit for 10 consecutive A.Y. Initial A.Y. should start within 15 A.Y. in which assessee starts its operation

Cross country natural gas distribution network

An Indian company engaged in carrying on a business of laying & operation cross-country natural gas distribution network including pipelines & storage facilities being an integral part of such network.

a) Start functioning on or after April 01, 2007
b) ITR should be filed on time & deduction should be claimed
c) Audit to be done by a CA.
It should be a new enterprise (with some exceptions)

100% of profit for 10 consecutive A.Y.
*Initial A.Y. should start within 15 A.Y. in which assessee starts its operation

Infrastructure Facility

The enterprise owned by an Indian organization that is engaged with providing infrastructure facilities. Infrastructure facility here means:

  • A road including toll road, a bridge or a rail system
  • A highway project
  • A water supply project
  • A port, airport, inland waterways or inland port or navigational channel is the sea

Conditions to claim deductions available under Section 80IA

Period of Commencement

Enterprise begins providing infrastructure facility on or after April 01, 1995. There is an exception that needs to notice is that the enterprise that began giving infrastructure facility after April 01, 2017, is not eligible to claim the deduction.

Income Tax Return

One of the conditions joined with this section is that assessee needs to file his Income Tax Return and ought to likewise claim the tax deduction of Section 80IA in return. Example:- For F.Y. 2018-19, the due date of return filing for companies was September 30, 2019. However, A ltd filed his ITR on 05 October 2019 claiming deduction u/s 80-IA. In this case, A Ltd is not eligible to claim deduction u/s 80-IA.

Audit Report

This deduction is permitted if accounts of the assessee have been audited by a CA according to the prerequisite. The audit report should be duly signed and verified by the CA and outfitted review report along with the return of the income.  Audit report to be submitted in Form 10CCB.

Amount of deduction to be claimed under Section 80IA

Under the Section 80IA, an assessee can claim 100% of the profit for the deduction for 10 consecutive Assessment Years. Deduction need not be taken from the first year of operation, this option is with the assessee to decide Initial Assessment Year to claim the deduction. But Initial Assessment year should start within a period of 15th Assessment Year in which an assessee starts operating infrastructure facility.

LEAVE A REPLY

Please enter your comment!
Please enter your name here