(for Setting up new undertakingS)

Submitted byMeenu KohliAssociate Prof. in CommerceH M V Jalandhar

80IB deduction is given where the GROSS TOTAL INCOME of an assessee includes any PROFITS

AND GAINS derived from any business of

Industrial Undertaking

Storage PlantProduction and Refining of mineral oil or natural gas

Development of housing projects

Development of hotels

Operation of a Ship

Eligibility1. INDUSTRIAL UNDERTAKINGS :Any industrial undertaking should fulfill the following CONDITIONS:a.) It is not formed by splitting up, or the reconstruction of it business already in existence.

b.) It is not formed by transfer to a new business of machinery or plant previously used for any purpose in India.c.) It is producing or manufacturing AN ARTICLE NOT INCLUDED in 11th schedule. This provision is not applicable for a small-scale undertaking.

d.) Period during which an undertaking has to be set-up

Undertaking Rate Period Set up

Set up in industrialbackward state

100%30%

For 1st 5 yrs.For next 5 yrs.

1.04.1993 to 31.03.2004

Located in A category ind. Bwd

100%30%

For 1st 5 yrs.For next 5 yrs.

1.10.1994 to 31.03.1995

Located in B category ind. Bwd

100%30%

For 1st 3 yrs.For next 5 yrs.

Same

Operating cold chain facility for agri. Produce

100%30%

For 1st 5 yrs.For next 5 yrs.

1.04.1999 to 31.03.2004

Any other incl. small scale

30% For 10 yrs. 1.04.1991 to 31.03.1995

2. COMPANIES ENGAGED IN SCIENTIFIC AND INDUSTRIAL RESEARCH AND DEVELOPMENT

[SEC. 80IB(8A)]E

LIG

IBL

E A

SSE

SSE

E ? OBJECT OF THE COMPANY ?

Company has the main object of scientific and industrial research

and development

AP

PR

OVA

L O

F T

HE

C

OM

PA

NY

100 % of the PROFITS AND GAINS of such

business

Deduction is available for

10 consecutive A.Y. beg from

initial A.Y.

3. UNDERTAKING ENGAGED IN PRODUCTION OR REFINING OF MINERAL OIL OR NATURAL GAS FROM

BLOCKS ALLOTTED UNDER NELP-VIII [80IB(9)]

Restriction on allotment of

residential unit to non-individual

Maximum Built up area of residential

unit

Size of plot

4. UNDERTAKING DEVELOPING AND BUILDING APPROVED HOUSING PROJECTS [SEC. 80 IB(10)]

Commencementof operations

Approval of project

Completion of project

Maximum built up area

of Shops

If residential unit allotted to an individual

Amount of Deduction

On or After the 1st October,

1998

By LOCAL AUTHORITY

before 31.03.2007

Case Date of Completion

When approved by local authority BEFORE 1.04.2004

On or before 31.03.2008

When ON OR AFTER 1.04.2004 but NOT LATER THAN 31.05.2005

Within 4 yrs

Where approved after 1.04.2005

Within 5 yrs. From the end of financial yr. in which housing project is approved by the local authority

A plot which has MINIMUM AREA OF ONE ACRE.*

Place/places Maximum Built up Area

Situated within cities of Delhi or MumbaiORWithin 25 kms from municipal limits of these cities.

1000 sq. ft.

Any other place. 1500 sq. ft.

NO residential unit shall be allotted to :

Spouse or minor children

The HUF in which individualis KARTA

Any person representing such individual.

100% of PROFITS

5. UNDERTAKING ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS AND VEGETABLES OR FROM

THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS [SEC. 80IB(11A)]

Amount of Deduction Period of Deduction

100% of profits For 1st 5 consecutive AY

30% of profits For next 5 consecutive AY

6. PROFITS OF AN UNDERTAKING FROM THE BUSINESS OF OPERATING AND MAINTAINING A HOSPITAL

[SEC. 80IB(11B)]

Construction Period

No. of beds

Approvalby local authority

Audit report

Amount of deduction

Period of deduction

Constructed anytime b/w 1.10.2004and 31.3.2008

At least 100 beds forpatients

Authority for the time being in force

As prescribedDuly signed &Verified by accountant certifying deduction is correctly claimed

100% Five Consectiveassessmentyears

7. PROFITS OF AN UNDERTAKING FROM THE BUSINESS OF OPERATING

AND MAINTAINING A HOSPITAL IN ANY AREA IN INDIA OTHER THAN

THE EXCLUDED AREA [SEC. 80IB(11C)]

Construction and commencement

No. of Beds

Approval by local authority

Audit report

Location of hospital

Amount of deduction

Period of deduction

Between 1.04.2008and 31.03.2013

At least 100

Authority for the timebeing in force

As prescribedDuly signed &Verified by accountant certifying deduction is correctly claimed

Anywhere in India except excluded areas

100 % Five Consectiveassessment years

EXCLUDED AREAS

Greater Mumbai Urban Agglomeration

Kolkata U. A.

Hyderabad U. A.

Ahmadabad U. A.

District of Gurgaon

District of Ghaziabad, etc

References

• Ahuja Girish (2016). “Systematic Approach to Income|Tax”, Bharat Law House, New Delhi.

• Gaur, Narang and Puri (2016). “Corporate TaxPlanning and Management”, Kalyani Publishers,Ludhiana.

• Section-80-IB, Income-tax Act, 1961-2015, retrievedfrom www.taxmann.com

• Deduction under section 80 IB, tax law and practice-ICSI pp 361-368, retrieved from www.icsi.in

• www.incometaxindia.gov.in