Deduction under chapter via(2)

DEDUCTIONS UNDER CHAPTER VIA

BY

SHANKAR BOSE

INSPECTOR OF INCOME-TAX

MSTU, PURI

DEDUCTIONS UNDER CHAPTER VIA

In computing the total income of an assessee, deductions specified under sections 80C to
80U will be allowed from his Gross Total Income {Sec. 80B(5)} in accordance with and
subject to the provisions of this Chapter. However, the aggregate amount of deductions
under this chapter shall not, in any case, exceed the gross total income of the assessee.

Where in computing the total income of an assessee, any deduction admissible under
section 80-IA or 80-IAB or section 80-IB or section 80-IC or Section 80-ID or section 80-IE
shall not be allowed to him unless he furnishes a return of his income for such assessment
year on or before the due date specified under sub-section (1) of section 139 (section 80AC)

SECTION 80C DEDUCTION IN RESPECT OF LIFE
INSURANCE PREMIA, DEFERRED
ANNUITY, CONTRIBUTIONS TO
PROVIDENT FUND, SUBSCRIPTION TO
CERTAIN EQUITY SHARES OR
DEBENTURES, ETC. (W.E.F. ASST. YEAR
2007-2008).

Persons Covered Individual /HUF.

Eligible Amount Any sums paid or deposited in the previous
year by the assessee —

1. As Life Insurance premium to effect or
keep in force insurance on life of (a) self,
spouse and any child in case of individual and
(b) any member, in case of HUF. Insurance
premium should not exceed 20% of the actual
capital sum assured.

2. To effect or keep in force a deferred
annuity contract on life of self, spouse and
any child in case of individual. Such contract
should not contain a provision for cash
payment option in lieu of payment of annuity.

3. By way of deduction from salary payable
by or on behalf of the Government to any
individual for the purpose of securing to him
a deferred annuity or making provision for
his spouse or children. The sum so deducted
does not exceed 1/5th of the salary.

4. As contribution (not being repayment of
loan) by an individual to Statutory Provident
Fund; i.e., any provident fund to which the
Provident Funds Act, 1925, applies.

5. As contribution to Public Provident
Fund scheme, 1968, in the name of self,
spouse and any child in case of individual and
any member in case of HUF.

6. As contribution by an employee to
a recognised provident fund.

7. As contribution by an employee to
an approved superannuation fund.

8. Any sum deposited in a 10 year or 15
year account under the Post Office
Savings Bank (CTD) Rules, 1959, in the
name of self and as a guardian of minor in
case of individual and in the name of any
member in case of HUF.

9. Subscription to the NSC (VIII issue).

10. As a contribution to Unit-linked Insurance
Plan (ULIP) of UTI or LIC Mutual Fund
(Dhanraksha plan) in the name of self, spouse
and child in case of individual and any member
in case of HUF.

11. To effect or to keep in force a contract for
such annuity plan of the LIC (i.e., Jeevan
Dhara, Jeevan Akshay and their upgradations)
or any other insurer as referred to in by the
Central Government.

12. As subscription to any units of any
Mutual Fund referred u/s. 10(23D) (Equity
Linked Saving Schemes).

13. As a contribution by an individual to
any pension fund set up by any Mutual Fund
referred u/s 10(23D).

14. As subscription to any such deposit
scheme of National Housing Bank (NHB),
or as a contribution to any such pension fund
set up by NHB as notified by Central
Government.

15. As subscription to notified deposit
schemes of (a) Public sector company
providing long-term finance for
purchase/construction of residential houses in
India or (b) Any authority constituted in India
for the purposes of housing or planning,
development or improvement of cities, towns
and villages.

16. As tuition fees (excluding any payment
towards any development fees or donation or
payment of similar nature), to any university,
college, school or other educational institution
situated within India for the purpose of full-
time education of any two children of
individual.

17. Towards the cost of purchase or
construction of a residential house
property (including the repayment of loans
taken from Government, bank, LIC, NHB,
specified assessee’s employer etc., and also
the stamp duty, registration fees and other
expenses for transfer of such house property
to the assessee). The income from such house
property should be chargeable to tax under
the head "Income from house property".

18. As subscription to equity shares or

debentures forming part of any eligible issue
of capital of public company or any public
financial institution approved by Board.

19. As Term Deposit (Fixed Deposit) for 5
years or more with Scheduled Bank in
accordance with a scheme framed and notified
by the Central Government.

20. As subscription to any notified bonds of
National Bank for Agriculture and Rural
Development (NABARD).

21. In an account under the Senior Citizen
Savings Schemes Rules, 2004.

22. As five year term deposit in an account
under the Post Office Time deposit Rules,
1981.

Relevant Conditions/Points 1. No deduction shall be allowed to
assessee in the previous year of
happening of following events (referred
henceforth as "such previous year") and
the aggregate amount of deductions of
income so allowed in respect of the previous
years preceding such previous year shall
be deemed to be the income of the
assessee of such previous year and shall be
liable to tax in the assessment year relevant to
such previous year; i.e., If the assessee:—

(a) Terminates the contract of
insurance (referred in item 1
above), by notice to that effect or if
the contract ceases to be in force by
reason of failure to pay any premium,
by not reviving the contract of
insurance, in case of any single
premium policy, within 2 years or in
any other case before the premiums
have been paid for 2 years.

(b) Terminates the participation in
any ULIP plan (referred in item 10
above) by notice to that effect or
ceases to participate by reason of
failure to pay any contribution, by not
reviving his
participation, before contributions in
respect of such participation has been
paid for 5 years.

(c) Transfers his house property
(referred in item 17 above)
before the expiry of 5 years from the
end of the financial year in which
possession of such property is obtained
or receives back, whether by way of
refund or otherwise any sum specified
in that clause.

(d) Sales or transfers any equity
shares or debentures (referred in

item 18 above) to any person at any
time within a period of 3 years from
the date of their acquisition (i.e., date
on which assessee’s name is entered in
the register of members or debenture
holders).

(e) Withdraw any amount (referred
in item 21 and 22 above) including
interest accrued thereon, before
the expiry of the period of five
years from the date of deposit. The
amount of interest withdrawn will
not be taxable in the year of
withdrawal if the same has been
including in the total income of the
assessee of an earlier year.

2. Any sum paid or deposited as above need
not be out of current year’s income but should
not exceed the total income of the relevant
previous year.

Extent of Deduction 100% of the amount invested or Rs.
1,00,000/- whichever is less. However, as per
Section 80CCE, the total deduction the
assessee can claim u/ss. 80C, 80CCC and
80CCD(1) shall be restricted in aggregate to
Rs. 1,00,000/-.

SECTION 80CCC DEDUCTION IN RESPECT OF
CONTRIBUTION TO CERTAIN PENSION
FUNDS

Persons Covered Individual.

Eligible Amount Deposit or payment made to LIC or any other
insurer in the approved annuity plan for
receiving pension.

Relevant Conditions/Points 1. The amount should be deposited or paid out
of taxable income.

2. No deduction u/s. 80C is allowed on
investment or expenditure on which deduction
is claimed under this section.

3. Any amount withdrawn or pension received
from the plan is taxable in the hands of the
assessee or nominee in the year of receipt.

4. The amount of interest or bonus accrued or
credited to the assessee’s account is not to be
regarded as amount paid.

Extent of Deduction Least of amount paid or Rs. 1,00,000/- . Refer
Note on extent of deduction in Section 80C.

SECTION 80CCD DEDUCTION IN RESPECT OF
CONTRIBUTION TO PENSION SCHEME OF
CENTRAL GOVERNMENT

Persons Covered Individual in the employment of Central
Government or any other employer on or after
1-1-2004 or any other assessee being an
individual.

Eligible Amount Deposit or payment made by the employee
and Central Government or individual under a
pension scheme notified by the Central
Government.

Relevant Conditions/Points 1. No deduction is allowed u/s. 80C in respect
of contribution claimed as deduction under this
section.

2. Any amount received from the scheme
either on closure or on the event of opting out
of the pension scheme, is taxable in the hands
of the assessee or nominee in the year of such
receipt.

3. Salary for the purpose of this section
includes dearness allowance, if the terms of
employment so provide, but excludes all other
allowances/perquisites.

4. For the purposes of these section, the
assessee shall be deemed not to have received
any amount in the previous year if such
amount is used for purchasing an annuity plan
in the same previous year.

Extent of Deduction A) Aggregate of (a) Amount paid or deposited
by the employee and (b) Amount paid or
deposited by the Central Government. The
total deduction shall be restricted to maximum
10% of salary.

B) Amount deposited by individual, subject to
10% of total income, in a previous year

SECTION 80CCF DEDUCTION IN RESPECT OF LONG TERM
INFRASTRUCTURE BONDS

Persons Covered Individual /HUF

Eligible Amount Investment or subscription made in notified
long term infrastructure bonds.

Relevant Conditions/Points 1) Long term infrastructure bonds must be
notified by the Central Government.

2) For the purpose of this section the definition
of person covered includes only the
Individual/HUF & does not include the wife or
husband & any child of such individual. That
means, the deduction is available to the
assessee who has actually made payment &
investment in his/her name. In case of a HUF,
any member thereof.

Extent of Deduction The maximum deduction limit is Rs. 20,000/-.

This deduction will be over and above the
existing aggregate limit of deduction of Rs.
1,00,000/- allowable u/ss. 80C, 80CCC and
80CCD of the Act. Applicable from Assessment
year 2011-12.

SECTION 80D DEDUCTIONS IN RESPECT OF MEDICAL
INSURANCE PREMIA

Persons Covered Individual/HUF

Eligible Amount Premium paid on Mediclaim Policy issued by
GIC or any other insurer approved by IRDA
(Insurance Regulatory and Development
Authority).

Relevant Conditions/Points 1. The amount should be paid by any mode
other than cash out of taxable income.

2. (a) Insurance on the health of the self,
spouse, parents or children of the assessee in
the case of Individual or (b) Insurance on the
health of any member if the assessee is HUF.

Extent of Deduction For Individual

A. For taxpayer his/her spouse and dependent
children: 100% of premium paid subject to
ceiling of (a) Rs. 20,000/- in the case of
premium paid in respect of senior citizen (who
has attained the age of 65 years or more) and
(b) Rs. 15,000/- in other cases.

B. Additional deduction for parents of the
taxpayer whether dependent or not 100% of
premium paid subject to ceiling of (a) Rs.
20,000/- in the case of premium paid in
respect of senior citizen (who has attained the
age of 65 years or more) and (b) Rs. 15,000/-
in other cases.

From Assessment year 2011-12, the
benefit of deduction will be extended to the
contribution made to Central Government
Health Scheme. However, the aggregate limit
for deduction remains the same.

SECTION 80DD DEDUCTION IN RESPECT OF
MAINTENANCE INCLUDING MEDICAL
TREATMENT OF HANDICAPPED
DEPENDANT

Persons Covered Resident Individual/HUF.

Eligible Amount (a) Expenditure incurred on medical treatment
[including nursing], training and rehabilitation
of a disabled dependant, or (b) Any payment
or deposit made under a scheme framed by
LIC or any other insurer or the administrator
or the specified company and approved by the
Board for payment of lump sum amount or

annuity for the benefit of dependant with
disability.

Relevant Conditions/Points 1. The concerned assessee must attach a copy
of certificate in the prescribed Form and
signed by prescribed medical authority along
with return of income filed u/s 139. A fresh
medical certificate may be required to be
submitted after the expiry of stipulated period
depending on the condition of disability as
specified in such certificate.

2. Dependant means (a) in case of an
individual, the spouse, children, parents,
brothers and sisters of such individual and (b)
in the case of a Hindu Undivided Family, any
member of HUF; and who is dependant wholly
or mainly on such individual or HUF for
support and maintenance and who has not
claimed deduction under section 80U for the
assessment year relating to previous year.

3. "Disability" has the same meaning assigned
to it in Section 2(i) of the Persons with
Disabilities (Equal Opportunities, Protection of
Rights and Full Participation) Act, 1995
[hereinafter referred to as PDEOPRFP Act] and
includes "autism", "cerebral palsy" and
"multiple disabilities" referred to in clauses (a),
(c) and (h) of Sec. 2 of the National Trust for
Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple
Disabilities Act, 1999 [NTWPACMRMD Act].

4. "Person with Disability" means a person as
referred to in Sec. 2(f) of the PDEOPRFP Act or
Sec. 2(j) of NTWPACMRMD Act.

5. "Person with Severe Disability" means a
person suffering from 80% or more of one or
more disabilities prescribed u/s. 56(4) of
PDEOPRFP Act or u/s. 2(o) of NTWPACMRMD
Act.

6. If such dependant predeceases the
individual or the member of HUF in whose
name the subscription is made in the scheme,
the amount shall be taxable in the hands of
the concerned assessee in the year of receipt.

7. The assessee can nominate (a) disabled
dependant or (b) any other person or (c) a
trust, to receive the payment from the scheme
for the benefit of disabled dependant.

Extent of Deduction (a) Rs. 50,000/- in case of normal disability or
(b) Rs. 100,000/- in case of severe disability.

SECTION 80DDB DEDUCTION IN RESPECT OF MEDICAL
TREATMENT, ETC.

Persons Covered Resident Individual/HUF.

Eligible Amount Expenditure actually incurred for the medical
treatment of such diseases or ailments
specified in Rule 11DD (some of the diseases
are parkinsons disease, malignant cancers, full
blown AIDS, chronic renal failure,
thalassaemia etc.) for self or dependant
relative (spouse, children, parents, brothers
and sisters) in case of individual or any
member of HUF in case of HUF.

of certificate in the prescribed Form No.10-I by
a neurologist, an oncologist, a urologist, a
haematologist, an immunologist or such other
specialist working in Government Hospital
along with return of income.

2. The deduction under this section shall be
reduced by the amount received under
insurance from an insurer or reimbursed by an
employer, for the medical treatment of the
concerned person.

Extent of Deduction 100% of the expenses incurred subject to
ceiling of (a) Rs. 60,000/- in the case of
expenses incurred for senior citizen (who has
attained the age of 65 years or more) and (b)
Rs. 40,000/- in other cases.

SECTION 80E DEDUCTION IN RESPECT OF INTEREST ON
LOAN TAKEN FOR HIGHER EDUCATION

Persons Covered Individual.

Eligible Amount Any amount paid by way of interest on loan
taken from any financial institution or any
approved charitable institution for his/her
higher education or w.e.f. 1-4-2008 for the
purpose of higher education of his/her spouse,
children and legal guardian of the Individual.

Relevant Conditions/Points 1. Amount should be paid out of income
chargeable to tax.

2. All field of studies including vocational
studies pursued after passing the Senior
secondary examination or its equivalent from
any school, board or university recognized by
the central govt. or state govt. or local
authority or by any other authority authorised
by the central govt. or state govt. or local
authority to do so.

3. Approved charitable institution means an
institution established for charitable purposes
and notified by the Central Government u/s.
10(23C) or referred in 80G(2)(a).

4. Financial institution means banking
company or financial institution notified by
Central Government.

5. The deduction is allowed in the initial
assessment year (i.e., the assessment year
relevant to the previous year, in which the
assessee starts paying the interest on loan)
and 7 assessment years immediately
succeeding the initial assessment year or until
the interest is paid in full whichever is earlier.

Extent of Deduction Entire amount of interest.

SECTION 80G DEDUCTION IN RESPECT OF DONATIONS
TO CERTAIN FUNDS, CHARITABLE
INSTITUTIONS, ETC.

Persons Covered All assessees [except for 80G (2)(c), which is
applicable for donations made only by
company] to the Indian Olympic Association or
to any other Association or Institution for the
development of infrastructure for sports &
games or the sponsorship of sports & games,
in India.

Eligible Amount Any sums paid in the previous year as
Donations to certain funds, charitable
institutions etc. specified u/s. 80G(2).

Relevant Conditions/Points 1. Donation in kind is not eligible for
deduction.

2. Donations paid out of another year’s income
or out of income not includible in the
assessment of current year are also eligible for
deduction. Lt. F. No. 45/313/66 – ITJ (61) dt.
2-12-1966.

Extent of Deduction Without any ceiling of 10% of adjusted
Gross Total Income:—

(a) 100% of donation if donation given
to National Defence Fund set up by the
Central Government; Prime Minister’s National
Relief Fund; Prime Minister’s Armenia
Earthquake Relief Fund; Africa (Public
Contributions — India) Fund; National
Foundation for Communal Harmony; An
approved university/educational institution of
National eminence; The Maharashtra Chief
Minister’s Relief Fund during October 1, 1993
and October 6,1993; Chief Minister’s
Earthquake Relief Fund, Maharashtra; Any
fund set up by the State Government of
Gujarat exclusively for providing relief to the
victims of earthquake in Gujarat; any Zila
Saksharta Samiti constituted in any district
under the chairmanship of the Collector of that
district; National Blood Transfusion Council or
to any State Blood Transfusion Council; any
fund set up by a State Government for the
medical relief to the poor; the Army Central
Welfare Fund or the Indian Naval Benevolent

Fund or the Air Force Central Welfare Fund,
Andhra Pradesh Chief Minister’s Cyclone Relief
Fund, 1996; National Illness Assistance Fund;
Chief Minister’s Relief Fund or Lieutenant
Governor’s Relief Fund in respect of any State
or Union Territory; National Sports Fund;
National Cultural Fund; Fund for Technology
Development and Application; National Trust
for Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple
Disabilities; Any trust, institution or fund to
which Section 80G(5C) applies for providing
relief to the victims of earthquake in Gujarat
(contribution made during January 26, 2001
and September 30, 2001) or

(b) 50% of donation if donation given
to Jawaharlal Nehru Memorial Fund; Prime
Minister’s Drought Relief Fund; National
Children’s Fund; Indira Gandhi Memorial Trust;
Rajiv Gandhi Foundation.

With ceiling of 10% of adjusted Gross
Total Income:— Where the aggregate of
sums exceed 10% of adjusted gross total
income, then such excess amount is ignored
for computing such aggregate.

(a) 100% of qualifying amount, if
donation given to Government or any
approved local authority, institution or
association to be utilised for the purpose of
promoting family planning; Donation by a
Company to the Indian Olympic Association or
to any other notified association or institution
established in India for the development of
infrastructure for sports and games in India or
the sponsorship of sports and games in India.

(b) 50% of qualifying amount if donation
given to any other fund or any institution
which satisfies conditions mentioned in Section
80G(5); Government or any local authority to
be utilised for any charitable purpose other
than the purpose of promoting family
planning, Any authority constituted in India for
the purpose of dealing with and satisfying the
need for housing accommodation or for the
purpose of planning, development or
improvement of cities, towns, villages or both;
Any corporation referred in Section 10(26BB)
for promoting interest of minority community;
For repairs or renovation of any notified
temple, mosque, gurudwara, church or other
place.

SECTION 80GG DEDUCTION IN RESPECT OF RENT PAID

Persons Covered Any assessee other than assessee having
income falling u/s 10(13A) (i.e., House Rent
Allowance).

Eligible Amount Any expenditure incurred by him on payment
of rent (by whatever name called) in respect
of any furnished or unfurnished
accommodation in excess of 10% of his total
income, before making any deduction under
this section.

Relevant Conditions/Points 1. Such accommodation is occupied by him for
his own residence.

2. The assessee should file a declaration in
Form No. 10BA along with return of income.

3. This section shall not apply to an assessee
if residential accommodation is, (a) owned by
the assessee or by his spouse or minor child or
where such assessee is member of HUF, by
such family, at the place where he ordinarily
resides or performs duties of his office or
employment or carries on his business or
profession. OR (b) owned by the assessee at
any other place, being accommodation in the
occupation of the assessee, the value of which
is to be determined u/s. 23(2)(a) or 23(4)(a).

Extent of Deduction Lower of (a) Rs. 2,000 per month, or (b) 25%
of the total income (after allowing all
deductions except under this section), or (c)
Expenditure incurred in excess of 10% of the
total income (after allowing all deductions
except under this section).

SECTION 80GGA DEDUCTION IN RESPECT OF CERTAIN
DONATIONS FOR SCIENTIFIC RESEARCH
OR RURAL DEVELOPMENT

Persons Covered All assessees:

Eligible Amount 1. Any sum paid to a scientific research
association or to a university, college, or other
institution to be used for scientific
research[approved u/s. 35(1) (ii)];

2. Any sum paid to a university, college, or
other institution to be used for research in
social science or statistical
research[approved u/s. 35(1)(iii)];

3. Any sum paid to an association or
institution for any programme of rural
development [approved u/s. 35CCA];

4. Any sum paid to an association or
institution for training of persons for
implementing rural development
programmes[approved u/s. 35CCA];

5. Any sum paid to a public sector company or
local authority or to an association or
institution approved by National Committee for
carrying out any eligible project or
scheme [approved u/s. 35AC];

6. Any sum paid to a rural developemt
fund set up and notified by Central
Government for the purposes of Section
35CCA(1)(a);

7. Any sum paid to a National Urban
Poverty Eradication Fund set up and
notified by Central Government for the
purposes of Section 35CCA(1)(d).

Relevant Conditions/Points 1. No deduction is allowed if assessee has
income chargeable under the head "Profits and
gain of business and profession".

2. Any sum in respect of which deduction is
allowed under this section will not qualify for
deduction under any other provision of this Act
for any assessment year.

3. If donation is paid for rural development,
then the assessee should furnish the certificate
referred to in Section 35CCA(2) or 35CCA(2A)
from such association or institution and if
donation paid for eligible project/scheme then
the assessee should furnish the certificate
referred to in Section 35AC(2)(a) from such
association.

Extent of Deduction 100% of the amount paid as
donation/contribution.

SECTION 80GGB DEDUCTION IN RESPECT OF
CONTRIBUTION GIVEN BY COMPANIES TO
POLITICAL PARTIES OR AN ELECTORAL
TRUST"

Persons Covered Indian company.

Eligible Amount Contribution given by Indian companies to any
political parties or an electoral trust.

Relevant Conditions/Points 1. The word "contribute" has the meaning
assigned to it under Section 293A of the
Companies Act, 1956.

2. "Political party" means a political party
registered under Section 29A of the
Representation of the People Act, 1951.

3. "Electoral Trust" is defined in section
2(22AAA) of IT Act, 1961

Extent of Deduction 100% of the amount paid as contribution.

SECTION 80GGC DEDUCTION IN RESPECT OF
CONTRIBUTION GIVEN BY ANY PERSON
TO POLITICAL PARTIES OR AN
ELECTORAL TRUST"

Persons Covered Any assessee (except local authority and every
artificial juridical person wholly or partly

funded by the Government).

Eligible Amount Contribution given by assessee to political
parties or an electoral trust.

Relevant Conditions/Points "Political party" means a political party
registered under Section 29A of the
Representation of the People Act, 1951.

"Electoral Trust" is defined in section 2(22AAA)
of IT Act, 1961

Extent of Deduction 100% of the amount paid as contribution.

SECTION 80-IA DEDUCTIONS IN RESPECT OF PROFITS &
GAINS FROM CERTAIN INDUSTRIAL
UNDERTAKINGS ENGAGED IN
INFRASTRUCTURE DEVELOPMENT, ETC.

Persons Covered Assessee carrying any of the following eligible
businesses through an industrial undertaking
or enterprise except any person who executes
a work contract (including the contract
awarded by central or state government) w.e.f
1st day of April, 2000:—

(A) Provision of infrastructure facility;

(B) Telecommunication services;

(C) Industrial parks or special economic zone;

(D) Power generation, transmission and
distribution,

(E) Renovation, Reconstruction or revival of
Power Generating Plant.

Eligible Amount Profits and gains derived by an undertaking or
enterprise from any of the above businesses.

General Conditions/Points 1. The profits and gains of an eligible business
shall be computed as if such eligible business
were the only source of income of the
assessee.

2. The accounts of the undertaking for the
previous year relevant to the assessment year
for which the deduction is claimed must be
audited by a chartered accountant and Audit
Report in Form No. 10CCB should be furnished
along with the return of income.

3. No deduction shall be allowed under this
section if the assessee fails to file the return of
income for such assessment year on or before
the due date specified u/s. 139(1) (w.e.f.
A.Y.2006-07, section 80AC)

4. Where deduction of any amount of profits
and gains of business is claimed and allowed
under this section, then the deduction to the
extent of such profit and gains shall not be

allowed under any other provisions of this
chapter and the deduction shall in no case
exceed the profits and gains of such eligible
business of undertaking or enterprise, as the
case may be.

5. The benefit of Section 80-IA shall not be
available to an amalgamated or demerged
entity after April 1, 2007.

6. If any goods or services held for the
purposes of the eligible business are
transferred to any other business carried on by
the assessee, or where any goods held for the
purposes of any other business of the
assessee are transferred to the eligible
business, then in either case it should be
ensured that the transaction occurs at the
market value of such goods or services as on
the date of transfer, otherwise Assessing
Officer (AO) has the power to recompute the
profits based on the market value of such
goods or services.

7. If it appears to the AO, that business
between the assessee (engaged in eligible
business) and any other person is so arranged
that the business transacted between them
produces to the assessee more than ordinary
profits, then the AO shall take the amount of
profit as may be reasonably deemed to have
been derived therefrom.

Type of Undertaking or A. Any enterprise carrying on business of (a)
Enterprise developing, or (b) operating and maintaining
or (c) developing, operating and maintaining
any infrastructure facility.

Relevant Conditions/Points 1. The enterprise should be owned by a
company registered in India or by a
consortium of such companies or (w.e.f. Asst.
year 2006-07, by an authority or a board or a
corporation or any other body established or
constituted under any Central or State Act).

2. The enterprise should have entered in to
agreement with Central Government or a
State Government or a local authority or any
other statutory body for (a) developing, (b)
operating and maintaining or (c) developing,
operating and maintaining a new infrastructure
facility.

3. "Infrastructure facility" means a road, toll
road, bridge, rail system, highway project
including housing or other activities being an
integral part of the highway project, water
supply project, water treatment system,
irrigation project, sanitation and sewerage
system or solid waste management system,
port, airport, inland waterway or inland port.or
navigational channel in the sea.

4. Where housing or other activities form an
integral part of the highway project and the
profits of which are computed on such basis
and manner as prescribed (Rule 18BBE & Form
No. 10CCC) then, such profit shall not be liable
to tax, if the profit has been transferred to a
special reserve account and the same is
actually utilised for the highway project
excluding the housing and other activities
before the expiry of 3 years following the year
in which such amount was transferred to the
reserve account; and the amount remaining
unutilised shall be chargeable to tax as income
of the year in which such transfer to reserve
account took place.

Period of Commencement The enterprise has started or starts operating
and maintaining the infrastructure facility on
or after 1st April, 1995.

Status of Transferee

Where an infrastructure facility is
transferred on or after the 1st day of April,
1999, by an enterprise which developed such
infrastructure facility (transferor) to another
enterprise (transferee) for the purpose of
operating and maintaining the infrastructure
facility on its behalf in accordance with the
agreement with the Central or State
Government, local authority or statutory body,
the provisions of this section shall apply to the
transferee enterprise as if the transfer had not
taken place and the deduction under this
section shall be available to such transferee
enterprise for the unexpired period.

Extent of Deduction (a) 100% for any 10 consecutive assessment
years out of 20 years (at the option of the
assessee) [beginning from the year in which
the enterprise develops and begins to operate
any infrastructure facility], in case of project of
a road, toll road, bridge, rail system, highway
project including housing or other activities
being an integral part of the highway project,
water supply project, water treatment system,
irrigation project, sanitation and sewerage
system or solid waste management system
and

(b) 100% for any 10 consecutive assessment
years out of 15 years in other cases of port,
airport, inland waterway or inland port, etc.

Type of Undertaking or B. An undertaking
Enterprise providing telecommunication services like
basic or cellular, radio paging, domestic
satellite service, network of trunking,
broadband network and internet services.

Relevant Conditions/Points The undertaking must comply with conditions
laid out in Section 80-IA(3) namely;

(a) It should not be formed by splitting up, or
re-construction, of a business already in
existence (except for undertaking referred u/s.
33B);

(b) It should not be formed by the transfer to
a new business of machinery or plant
previously used for any purpose (exceptions
provided in Explanations 1 & 2 to clause (ii) of
sub-section (3) of Section 80-IA).

Period of Commencement The undertaking has started providing the
telecommunication services referred to above
on or after 1st April, 1995, but on or before
31st March, 2005.

Extent of Deduction 100% for first 5 assessment years and 30%
for next 5 assessment years. Deduction as
above can be claimed in 10 consecutive
assessment years out of 15 years (at the
option of the assessee) [beginning from the
year in which the undertaking starts providing
telecommunication service].

Type of Undertaking or C. An undertaking which develops, develops
Enterprise and operates or maintains and operates
an Industrial Park or Special Economic Zone.

Relevant Conditions/Points 1. The industrial park or special economic zone
should be notified by the Central Government
in accordance with the scheme framed and
notified by it.

section to any Special Economic Zones notified
on or after 1st April, 2005 (As per Special
Economic Zones Act, 2005, w.e.f. 10th
February, 2006; deduction shall be allowable
u/s. 80-IAB in such cases).

Period of Commencement (a) The undertaking has developed or
develops the special economic zone on or after
1st April, 1997, but on or before 31st March,
2006.

(b) The undertaking has developed or
develops the industrial park on or after 1st
April, 1997, but on or before 31st March,
2011.

Status of Transferee Where an undertaking develops industrial park
on or after 1st April, 1999 or a special
economic zone on or after 1st April, 2001, and
transfers the operation and maintenance of
such industrial park or special economic zone,
as the case may be, to another undertaking
(transferee), then the deduction under this
section shall be allowed to such transferee for

the remaining period in the ten consecutive
assessment years as if the operation and
maintenance were not so transferred to such
transferee.

Extent of Deduction 100% for 10 consecutive assessment years
out of 15 years (at the option of the assessee)
[beginning from the year in which the
undertaking develops an industrial park or
special economic zone].

Type of Undertaking or D. An undertaking which (a) is set up in any
Enterprise part of India for the generation or generation
and distribution of power or (b) starts
transmission or distribution by laying a
network of new transmission or distribution
lines or (c) undertakes substantial renovation
and modernisation of the existing network of
transmission or distribution lines.

Relevant Conditions/Points 1. The undertaking for transmission or
distribution of power by laying a network of
new transmission lines shall be allowed
deduction only in relation to the profits derived
from laying of such network of new lines.

2. The undertaking [excluding State Electricity
Board referred to in Sec. 2(7) of Electricity
Act, 2003 w.e.f. A.Y. 2005-06] must comply
with conditions laid out in Section 80-IA(3)
namely;

(a) It should not be formed by splitting
up, or re-construction, of a business
already in existence (except for
undertaking referred u/s. 33B);

(b) It should not be formed by the
transfer to a new business of
machinery or plant previously used for
any purpose (exceptions provided in
Explanations 1 & 2 to clause (ii) of sub-
section (3) of Section 80-IA).

3. "Substantial renovation and modernisation"
means an increase in the plant and machinery
in the network of transmission or distribution
lines by at least 50% of the book value of such
plant and machinery as on 1st April, 2004.

Period of Commencement (a) For generation and distribution of power,
the Undertaking begins to generate power
between 1st April, 1993 and 31st March, 2012.

(b) For transmission or distribution lines, the
Undertaking starts transmission between 1st
April, 1999 and 31st March, 2012.

(c) For substantial renovation and
modernisation of transmission or distribution
lines, the Undertaking undertakes substantial
renovation and modernisation between 1st

undertaking generates power or commences
transmission or distribution of power or
undertakes substantial renovation and
modernisation of existing transmission or
distribution lines, as the case may be].

Type of Undertaking or E. An undertaking owned by an Indian
Enterprise Company and set up for reconstruction or
revival of a Power Generating Plant.

Relevant Conditions/Points 1. Such Indian Company is formed before 30th
November, 2005, with majority equity
participation by public sector companies for
the purposes of enforcing the security interest
of the lenders to the company owning the
power generating plant.

2. Such Indian Company is notified before 31st
December, 2005, by the Central Government
for the purposes of this clause.

Period of Commencement The Undertaking begins to generate or
transmit or distribute power before 31st
March, 2011. (shall be deemed to have been
substituted w.e.f. 1st day of April, 2008)

undertaking generates power or commences
transmission or distribution of power].

SECTION 80-IAB DEDUCTIONS IN RESPECT OF PROFITS &
GAINS BY AN UNDERTAKING OR
ENTERPRISE ENGAGED IN DEVELOPMENT
OF SPECIAL ECONOMIC ZONE

Persons Covered Assessee, being a developer, carrying on the
business of developing a Special Economic
Zone (notified on or after 1st April, 2005,
under Special Economic Zones Act, 2005)
through an industrial undertaking or
enterprise.

enterprise from the business of developing a
Special Economic Zone.

Relevant Conditions/Points 1. The terms "Developer" and "Special
Economic Zone" shall have the same meanings
respectively as assigned to them in clauses (g)
and (za) of Section 2 of the Special Economic
Zones Act, 2005.

2. The profits and gains of an eligible business
assessee.


the due date specified u/s. 139(1) (w.e.f. A.Y.
2006-07 as per Section 80AC).

case may be.

6. If any undertaking of an Indian company
which is entitled to deduction under this
section is transferred, before the expiry of the
period specified in this section, to another
Indian company, in a scheme of amalgamation
or demerger, then no deduction shall be
admissible under this section to the
amalgamating or demerged company for the
previous year in which the amalgamation
takes place and the provisions of this section
shall, as far as may be, apply to the
amalgamated or resulting company as they
would have applied to the amalgamating or
demerged company if the amalgamation or
demerger had not taken place.


goods or services.


Status of Transferee Where an undertaking, being a developer who
develops a Special Economic Zone on or after
1st April, 2005, and transfers the operation
and maintenance of such Special Economic
Zone to another Developer (transferee), then
the deduction under this section shall be
allowed to such transferee for the remaining
period in the ten consecutive assessment
years as if the operation and maintenance
were not so transferred to such transferee.

[beginning from the year in which the Special
Economic Zone has been notified by the
Central Government].

SECTION 80-IB DEDUCTION IN RESPECT OF PROFITS &
GAINS OF CERTAIN INDUSTRIAL
UNDERTAKINGS OTHER THAN
INFRASTRUCTURE DEVELOPMENT
UNDERTAKINGS

Persons Covered Assessee carrying any of the eligible
businesses through following industrial
undertaking or enterprise:—

1. Industrial Undertaking located in notified
backward district, state or region or other
places or Small scale industrial undertaking,
engaged in manufacturing/producing any
articles/things or operating its cold storage
plant;

2. Hotels;

3. Multiplex Theatres;

4. Convention Centres;

5. Scientific Research & Development;

6. Refining of Mineral Oil or Natural Gas;

7. Developing and Building Housing projects;

8. Operating cold Storage facility for
agricultural produce;

9. Processing, preserving and packaging of
fruits and vegetables or integrated business of
handling, storage and transportation of food
grains;

10. Operating and maintaining hospital in any
area other than excluded area.

enterprise from any of the above businesses.

General Conditions/Points 1. The profits and gains of an eligible business
assessee.

2. The Undertaking should not be formed by
splitting up, or re-construction, of a business
already in existence (except for undertaking
referred u/s. 33B).

3. The Undertaking should not be formed by
the transfer to a new business, machinery or
plant previously used for any purpose
(exceptions provided in Explanations 1 & 2
below sub-clause (iii) to sub-section (2) of
Section 80-IB).

4. The undertaking should not manufacture or
produce any article or things specified in
eleventh schedule.

5. The industrial undertaking should employ
10 or more workers in manufacturing process
carried on with power and 20 or more workers
in manufacturing process carried on without
the aid of power.

Report in prescribed form (Form No. 10CCBA
for multiplexes, 10CCBB for convention
centres, 10CCBC for hospitals and 10CCB for
others) should be furnished along with the
return of income.

the due date specifies u/s. 139(1) (w.e.f. A.Y.

business of undertaking.


goods or services.


Type of Undertaking A. Industrial undertaking located at
industrially backward district of Category
"A"

Relevant Conditions/Points The undertaking should not manufacture or
produce any article or thing specified in the list
in the Eleventh Schedule.

Period of Commencement Between 1st October, 1994 and 31st March,
2004.

Extent of Deduction 100% for first 5 A.Ys. and 25% (30% for
company) for next 5 A.Ys. (7 A.Ys. for Co-
operative society) beginning with the
assessment year relevant to the previous year
in which the industrial undertaking begins to
manufacture or produce articles or things or to
operate cold storage plant or plants.

Type of Undertaking B. Industrial undertaking located at
industrially backward district of Category
"B"

produce any article or thing specified in the list
in the Eleventh Schedule.

Period of Commencement Between 1st October, 1994 and 31st March,
2004.


Type of Undertaking C. Industrial undertaking located at
industrially backward state specified in
Eighth Schedule

Relevant Conditions/Points No deduction shall be allowed from
assessment year beginning from 1st April,
2004 or any subsequent year to any
undertaking or enterprise referred to in
Section 80-IC(2).

Period of Commencement Between 1st April, 1993 and 31st March,
2004.


Type of Undertaking D. Industrial undertaking located in
North-Eastern Region notified by Central
Government in industrially backward
state

Relevant Conditions/Points No deduction shall be allowed from
assessment year beginning from 1st April,
2004 or any subsequent year to any
undertaking or enterprise referred to in
Section 80-IC(2).

2004.

Extent of Deduction 1) 100% for first 10 A.Ys. beginning with the

2) If undertaking has begun or begins
commercial production of mineral oil on or
after the 1st day of April, 1997 & is located in

any part of India, then the benefit of the
section 80IB(a)(ii) shall not apply to blocks
licensed under a contract awarded after 31st
March, 2011 under the New Exploration
Licensing Policy announced by the State or
Central Government.

Type of Undertaking E. Industrial undertaking located in the
State of Jammu and Kashmir

produce any article or thing specified in the
Part C of the Thirteenth Schedule (w.e.f. A.Y.
2005-06).

2012.


Type of Undertaking F. Small-scale industrial undertaking.

Relevant Conditions/Points 1. Undertaking should be other than those
mentioned above (i.e., A to E).

2. Small-scale industrial undertaking means an
industrial undertaking which is, as on the last
day of the previous year, regarded as small-
scale industrial undertaking u/s. 11B of the
Industries (Development and Regulation) Act,
1951. [i.e., investment in fixed assets in plant
and machinery whether held on ownership
terms or on lease, or by hire purchase does
not exceed Rs. 1 crore (or Rs. 5 crore in some
cases)].

2002.

Extent of Deduction 25% (30% for company) for first 10 A.Ys. (12
A.Ys. for Co-operative society) beginning with
the assessment year relevant to the previous
year in which the industrial undertaking begins
to manufacture or produce articles or things or
to operate cold storage plant or plants.

Type of Undertaking G. Hotels (approved by the prescribed
authority) located in a hilly area or a rural
area or a place of pilgrimage or other
place notified by Central Government.

Relevant Conditions/Points 1. In addition to general conditions mentioned
hereinbefore, the business of hotel should not
be formed by transfer of a building previously

used as a hotel.

2. The business of hotel is owned and carried
on by a company registered in India with a
paid-up capital of Rs. 5 lakhs or more.

3. Hotel located at a place within the municipal
jurisdiction of Kolkata, Chennai, Delhi or
Mumbai which has started between 1st April,
1997 and 31st March, 2001, is not covered by
this clause.

2004, or between 1st April, 1997 and 31st
March, 2001.

Extent of Deduction 50% for first 10 A.Ys. beginning with the
in which the business of hotel starts
functioning.

Type of Undertaking H. Hotels (approved by the prescribed
authority) located other than above.

hereinbefore, the business of hotel should not
be formed by transfer of a building previously
used as a hotel.

2. The business of hotel is owned and carried
on by a company registered in India with a
paid-up capital of Rs. 5 lakhs or more.

3. Hotel located at a place within the municipal
jurisdiction of Kolkata, Chennai, Delhi or
Mumbai which has started between 1st April,
1997 and 31st March, 2001, is not covered by
this clause.

1995, or between 1st April, 1997 and 31st
March, 2001.

in which the business of hotel starts
functioning.

Type of Undertaking I. Business of building, owning and
operating a Multiplex theatre.

hereinbefore, the business of multiplex theatre
should not be formed by transfer of a building
previously used for any purpose.

2. Multiplex Theatre located at a place within
the municipal jurisdiction of Kolkata, Chennai,
Delhi or Mumbai is not covered by this section.

3. "Multiplex Theatre" means a building of
prescribed area, comprising of 2 or more

cinema theatres and commercial shops of such
size and number and having such other
facilities and amenities as may be prescribed
(See Rule 18DB).

2005.

in which a cinema hall, being a part of the said
multiplex theatre, starts functioning.

Type of Undertaking J. Business of building, owning and
operating a convention centre.

hereinbefore, the business of convention
centre should not be formed by transfer of a
building previously used for any purpose.

2. "Convention centre" means a building of a
prescribed area comprising of convention halls
to be used for the purpose of holding
conferences and seminars, being of such size
and number and having such other facilities
and amenities as may be prescribed (See Rule
18DC).

2005.

in which the convention centre starts operating
on a commercial basis.

Type of Undertaking K. Any company registered in India
(approved by prescribed authority after
31st March, 2000) carrying on scientific
research and development.

Relevant Conditions/Points 1. The company should have the main object
of scientific and industrial research and
development and company is an Indian
company.

2. The company should be approved by
prescribed authority at any time between 1st

3. The company fulfils such other conditions as
may be prescribed (See Rule 18DA).

in which the company is approved by the
prescribed authority.

Type of Undertaking L. Undertaking engaged in commercial
production or refining of mineral oil,

Production of Natural gas under licensed
under NELP VIII OR Round IV of coal Bed
Methane Block.

Period of Nature of activity Period
Commencement

Refining of Mineral Anywhere is India on
oil or after 1st Oct, 1998
but before
31st March, 2012.

Production of Begins Commercial
Natural Gas-NELP production on or after
VIII 1st April, 2009.

Production of Gas-Round IV of
Natural Bidding

For coal Bed Begins commercial
Methane Blocks production on or after
1st April, 2009.

in which the undertaking commences the
commercial production or refining of mineral
oil.

Type of Undertaking M. Undertaking engaged in developing
and building housing projects except as a
works contract awarded by any person
(including contract awarded by Central or
State Government) Inserted w.e.f the 1st
day of April, 2001.

Relevant Conditions/Points 1. The Housing project should be approved
before 31st March, 2008 by a local authority.

2. The undertaking should have commenced or
commences the development and construction
of the housing project on or after 1st day of
October, 1998.

3. (i) For housing projects approved before 1st
April, 2004, construction should be completed
on or before 31st March, 2008 and for Housing
projects approved during financial year 2004-
05, four years from the end of the financial
year in which the housing project is approved
by local authority.

(ii) For housing project approved on or after
1st April, 2005, construction should be
completed within 5 years from the end of the
financial years in which the project is
approved,

4. Where approval from local authority is
obtained more than once, the housing project
shall be deemed to have been approved on the

date the first approval was obtained.

5. The date of completion of construction of
the housing project shall be the date on which
the completion certificate is issued by the local
authority.

6. Housing project should be on plot of land of
a minimum area of 1 acre.

7. The relevant conditions mentioned from 2
to 6 above, shall not apply to a housing
project carried out in accordance with a
scheme framed by Central or State
Government for reconstruction or
redevelopment of existing buildings in areas
declared as slum areas under any law for the
time being in force and such scheme is notified
by the Board in this behalf.

8. The residential unit has (a) a maximum
built-up area of 1,000 sq. ft. in case of the
cities of Delhi and Mumbai or within 25 kms
from the municipal limits of these cities and
(b) 1,500 sq. ft. for other places.

9. Built-up area of the shops and other
commercial establishments included in a
housing project does not exceed 5% of
aggregate built-up area of the housing project
or 2,000
sq. ft., whichever is less.

For projects which are approved after March
31, 2005 and pending completion as on 1st
April, 2010 the limit of the built-up area of
shops and other commercial establishments
included in a housing project is 3% of
aggregate built-up area of the housing project
or 5,000 sq. ft., whichever is higher.

10. "Built-up area" means the inner
measurements of the residential unit at the
floor level, including the projections and
balconies, as increased by the thickness of the
walls but does not include the common areas
shared with other residential units.

11. Not more than one residential unit in the
hosing project is allotted to any person not
being an individual. (Inserted w.e.f. 1st day of
April, 2010)

12. In case where a residential unit in the
housing project is allotted to a person being an
individual, no other residential unit in such
housing project is allotted to any of the
following persons, namely:—

(i) the spouse or minor children of such
individual,

(ii) the Hindu Undivided Family in which
such individual is the Karta,

(iii) any person representing such
individual, the spouse or the minor
children of such individual or the Hindu
Undivided Family in which such
individual is the Karta. (inserted w.e.f.
1st day of April, 2010)

Extent of Deduction 100% of the profits derived in the previous
year relevant to any assessment year from
such housing projects.

Type of Undertaking N. Undertaking engaged in setting up and
operating a cold chain facility for
agricultural produce.

Relevant Conditions/Points "Cold chain facility" means a chain of facilities
for storage or transportation of agricultural
produce under scientifically controlled
conditions including refrigeration and other
facilities necessary for the preservation of such
produce.

2004.

operative society) beginning ith the
in which the undertaking begins to operate the
cold chain facility.

Type of Undertaking O. Undertaking engaged in (a) business
of processing, preservation and
packaging of fruits and vegetables or (b)
integrated business of handling, storage
and transportation of foodgrains.

Period of Commencement On or after 1st April, 2001.

Extent of Deduction 100% for first 5 A.Ys and 25% (30% for
company) for next 5 A.Ys. beginning with the
in which the undertaking begins such business.

Type of Undertaking P. Undertaking engaged in operating and
maintaining a hospital in a rural area.

Relevant Conditions 1. The hospital should be constructed on or
after 1st October, 2004, but before 1st April,
2008.

2. The hospital has at least 100 beds for
patients.

3. The construction is in accordance with the
regulations of the local authority.

4. The hospital shall be deemed to have been
constructed on the date on which completion

certificate is issued by the local authority.

Extent of Deduction 100% for first 5 A.Ys beginning with the initial
A.Y. relevant to the previous year in which
such undertaking begins to provide medical
services.

Type of Undertaking Q. Undertaking engaged in operating and
maintaining hospitals located anywhere
in India, other than the excluded area,

Relevant Conditions/Points 1. The hospital should be constructed and has
started or starts functioning during 1st April,
2008 and ending on the 31st day of March,
2013.

2. The hospital has at least 100 beds for
patients.

3. The construction is in accordance with the
regulations of the local authority.

4. The hospital shall be deemed to have been
constructed on the date on which completion
certificate is issued by the local authority.

Extent of Deduction 100% for first 5 A.Ys beginning with the initial
Assessment Year.

SECTION 80-IC DEDUCTION IN RESPECT OF PROFITS &
GAINS OF CERTAIN UNDERTAKINGS OR
ENTERPRISES SITUATED IN CERTAIN
SPECIAL CATEGORY STATES.

Persons Covered All Assessees.

Eligible Amount Profits and gains derived by certain
undertakings or enterprises in certain special
category States.

General Conditions/Points 1. The undertaking or enterprise should not be
formed by splitting up, or re-construction, of a
business already in existence (except for
undertaking referred u/s. 33B).

2. The undertaking or enterprise should not be
formed by the transfer to a new business,
machinery or plant previously used for any
purpose (exceptions provided in Explanations
1 & 2 to sub-section (3) of Section 80-IA shall
apply).

3. The profits and gains of an eligible business
assessee.

4. The undertaking should not manufacture or
produce article or things specified in eleventh
schedule.



the due date specifieed u/s. 139(1) (w.e.f. AY

case may be.


goods or services.


11. No deduction shall be allowed under any
other section contained in Chapter VIA or in

Section 10A or 10B in relation to the profits
and gains of the undertaking or enterprise.

12. No deduction shall be allowed to any
undertaking or enterprise under this section,
where the total period of deduction inclusive of
the period of deduction under this section, or
under 2nd proviso to Section 80-IB(4) or u/s.
10C as the case may be, exceeds 10
assessment years.

13. "Substantial expansion" means increase in
the investment in the plant and machinery by
at least 50% of the book value of plant and
machinery (before taking depreciation in any
year), as on first day of the previous year in
which substantial expansion is undertaken.

Type of Undertaking A. Any undertaking or enterprise which has
begun or begins to manufacture or produce or
which manufactures or produces any article or
thing, other than specified in Thirteenth
Schedule and undertakes substantial
expansion in any Export Processing Zone or
Integrated Infrastructure Development Centre
or Industrial Growth Centre or Industrial
Estate or Industrial Park or Software
Technology Park or Industrial area or Theme
Park, as notified by the Board in accordance
with the scheme framed and notified by the
Central Government in this regard in the State
of Sikkim or Himachal Pradesh or Uttaranchal
or North-Eastern States.

B. Any undertaking or enterprise which has
begun or begins to manufacture or produce or
which manufactures or produces any article or
thing, specified in Fourteenth Schedule or
commences any operation specified in that
schedule and undertakes substantial
expansion in the State of Sikkim or Himachal
Pradesh or Uttaranchal or North-Eastern
States.

Period of Commencement For State of Sikkim between 23rd December,
2002 and 31st March, 2007.

For States of Himachal Pradesh and
Uttaranchal between 7th January, 2003 and
31st March, 2012.

For North-Eastern States between 24th
December,1997 and 31st March, 2007.

Extent of Deduction For States of Sikkim and North Eastern States
— 100% for first 10 A.Ys. beginning with the
in which the undertaking or enterprise begins
to manufacture or produce articles or things or
commences operation or completes substantial
expansion.

For States of Himachal Pradesh and

Uttaranchal — 100% for first 5 A.Ys. and 25%
(30% for company) for next 5 A.Ys. beginning
with the assessment year relevant to the
previous year in which the undertaking or
enterprise begins to manufacture or produce
articles or things or commences operation or
completes substantial expansion.

SECTION 80-ID DEDUCTION IN RESPECT OF PROFITS AND
GAINS FROM BUSINESS OF HOTELS AND
CONVENTION CENTRES IN SPECIFIED
AREA

Persons Covered All Assessees

Type of undertaking and Assessee engaged in the business of
period of commencement
(i) Hotel of two-star, three-star or four-star
category as classified by Central Government
located in the specified area during the period
beginning on the April 1, 2007 and ending on
the July 31, 2010

(ii) Business of building, owning and operating
a convention centre, located in the specified
area during the period beginning on the April
1, 2007 and ending on the July 31, 2010.

(iii) Hotels, located in the specified area having
a world Heritage Site, during the period
beginning on the April 1, 2008 and ending on
the March 31, 2013.

Eligible Amount Profits and gains derived from the aforesaid
undertaking.

Relevant Condition (A) The aforesaid business is not formed by
the splitting up, or the reconstruction, of a
business already in existence. However, if a
new industrial undertaking is set up in an old
building, deduction shall be admissible as this
section provides for new undertaking and does
not provide for old building.

(B) The aforesaid business is not formed by
the transfer to a new business of machinery or
plant previously used for any purpose except
two:—

(a) 20% old machinery is permitted: if
the value of the transferred assets does
not exceed 20 per cent of the total
value of the machinery or plant used in
the business, this condition is deemed
to have been satisfied.

(b) Any machinery or plant which was
used outside India by any person other
than the assessee shall not be regarded
as machinery or plant previously used
for any purpose, if the following
condition are fulfilled.

— such machinery or
plant was not, at any
time prior to the date
installation by the
assessee, used in India.

plant is imported into
India from any country
outside India.

— no deduction on
account of depreciation in
respect of such
machinery or plant has
been allowed or is
allowable under the Act
in computing the total
income of any person for
any period prior to the
date of installation of the
machinery or plant by
the assessee.

(C) Audit report in form No. 10CCBA should be
submitted along with the return of income.

(D) Return of Income is submitted on or
before the due date of submission of return of
income given under section 139(1).

Extent of deduction 100% of the profits and gains derived from the
business is deductible for five consecutive
assessment years beginning from the initial
assessment year.

SECTION 80-IE DEDUCTION IN RESPECT OF CERTAIN
UNDERTAKINGS IN NORTH-EASTERN
STATES

Persons Covered Assessee begins manufacture or production of
goods or undertakes substantial expansion or
carries on eligible business during April 1,
2007 and March 31, 2017 in any North-
Eastern States.

Eligible Amount Profits and gains derived by an Undertaking or
Enterprise.

Relevant Condition A) The aforesaid business is not formed by the
splitting up, or the reconstruction, of a
business already in existence. However, if a
new industrial undertaking is set up in an old
building, deduction shall be admissible as this
section provides for new undertaking and does
not provide for old building.

B) The aforesaid business is not formed by the
transfer to a new business of machinery or
plant previously used for any purpose except
two:—

(a) 20% old machinery is permitted: if
the value of the transferred assets does
not exceed 20 per cent of the total
value of the machinery or plant used in
the business, this condition is deemed
to have been satisfied.

(b) Any machinery or plant which was
used outside India by any person other
than the assessee shall not be regarded
as machinery or plant previously used
for any purpose, if the following
conditions are fulfilled.

— such machinery
or plant was not,
at any time prior
to the date
installation by the
assessee, used in
India.

plant is imported into
India from any country
outside India.

C) Audit report 10CCB should be submitted
along with the return of Income.

D) Return of Income is submitted on or before
the due date of submission of return of income
given under section 139(1).

If deduction is claimed and allowed under the
aforesaid provisions, the tax payer will not be
able to avail any deduction under sections
10A, 10AA, 10B, 10BA, 80C to 80U. Moreover,
no deduction shall be allowed to an
undertaking under section 80-IE where the
total period of deduction under section 10C,
second proviso to sections 80-IB (4), 80-IC
and 80-IE exceeds 10 assessment years.

Extent of Deduction 100% of profit derived from the
business/services shall be deductible for 10
years beginning with assessment year relevant
to the previous year.

SECTION 80JJA DEDUCTION IN RESPECT OF PROFITS &
GAINS FROM BUSINESS OF COLLECTING
AND PROCESSING OF BIO-DEGRADABLE
WASTE

Persons Covered All Assessees.

Eligible Amount Profits and gains from business of collecting
and processing or treating of bio-degradable
waste.

Relevant Conditions/Points The business should be of collecting and
processing or treating of bio-degradable waste

for generating power or producing bio-
fertilizers, bio-pesticides or other biological
agents or for producing bio-gas or making
pellets or briquettes for fuel or organic
manure.

Extent of Deduction 100% of the profit and gains from such
business for a period of five consecutive
assessment years beginning with the
assessment year relevant to previous year in
which such business commences.

SECTION 80JJAA DEDUCTION IN RESPECT OF EMPLOYMENT
OF NEW WORKMEN

Persons Covered Indian company.

Eligible Amount Additional wages paid to the new regular
workmen employed.

Relevant Conditions/Points 1. Profits and gains should be derived from
any industrial undertaking, engaged in the
manufacture or production of article or thing.

2. The industrial undertaking should not be
formed by splitting up or reconstruction of an
existing undertaking or amalgamation with
another industrial undertaking.

3. Audit report in Form 10DA certifying that
the deduction has been correctly claimed is
required to be filed along with return of
income.

4. Additional wages means the wages paid to
the new regular workman in excess of 100
workmen employed during the previous year
provided that in case of an existing
undertaking, the additional wages shall be nil
if the increase in the number of regular
workmen employed during the year is less
than 10% of existing number of workmen
employed in such undertaking as on the last
day of the preceding year.

5. Regular workman does not include a casual
workman or a workman employed through
contract labour or any other workman
employed for a period of less than 300 days
during the previous year.

6. Workman shall have the meaning assigned
to it u/s. 2(s) of the Industrial Disputes Act,
1947.

Extent of Deduction 30% of the additional wages paid to the new
regular workmen for first 3 assessment years
including the assessment year relevant to the
previous year in which such employment is
provided.

SECTION 80LA DEDUCTION IN RESPECT OF CERTAIN

INCOMES OF OFF-SHORE BANKING UNITS
and International Financial Services
Centre. (as substituted by the Special
Economic Zones Act, 2005, w.e.f. 10th
February, 2006)

Persons Covered 1. 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.

2. A Unit of an International Financial Services
Centre.

Eligible Amount Income shall be

(a) The income from an Offshore Banking Unit
in a Special Economic Zone.

(b) The income from the business, referred to
in Section 6(1) of 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.

(c) The income from any Unit of the
International Financial Services Centre from its
business for which it has been approved for
setting up in such a centre in a Special
Economic Zone.

Relevant Conditions/Points 1. The terms "International Financial Services
Centre", "Special Economic Zone" and "Unit"
shall have the same meanings respectively as
assigned to them in clauses (q), (za) and (zc)
of Section 2 of the Special Economic Zones
Act, 2005.

2. The term "Scheduled Bank" shall have the
same meaning as assigned to it in clause (e)
of Section 2 of the Reserve Bank of India Act,
1934.

3. Audit report in Form 10CCF certifying that
the deduction has been correctly claimed is
required to be filed along with return of
income.

4. A copy of the permission obtained under
Section 23(1)(a) of the Banking Regulation
Act, 1949, is required to be filed along with
return of income.

Extent of Deduction 100% of such income for first 5 consecutive
assessment years beginning with the
in which permission u/s 23(1)(a) of Banking
Regulation Act, 1949, or permission or
registration under the Securities and Exchange
Board of India Act, 1992, or any other relevant

law was obtained and 50% of such income for
next 5 consecutive assessment years.

SECTION 80P DEDUCTION IN RESPECT OF INCOME OF
CO-OPERATIVE SOCIETIES

Type of Co-operative A. Co-operative Society engaged in —
Societies
(1) business of banking or providing
credit facilities to its members, or

(2) a cottage industry, or

(3) the marketing of agricultural
produce grown by its members, or

(4) the purchase of the agricultural
implements, seeds, livestock or other
articles intended for agriculture for
supplying them to its members, or

(5) the processing of the agricultural
produce of its members without the aid
of power, or

(6) the collective disposal of the labour
of its members, or

(7) fishing or allied activities; i.e.,
catching, curing, processing,
preserving, storing or marketing of fish
or the purchase of materials and
equipment in connection therewith for
the purpose of supplying them to its
members.

B. Co-operative society, being a primary
society engaged in supplying milk, oilseeds,
fruits or vegetables raised or grown by its
member to (a) a federal co-operative society
being a society engaged in the business of
supplying milk, oilseeds, fruits or vegetables,
as the case may be, or (b) the Government or
a local authority, or (c) a Government
company or a corporation established by or
under a Central, State or Provincial Act being a
company or corporation engaged in the
business of supplying milk, oilseeds, fruits or
vegetables, as the case may be to the public.

C. Co-operative society engaged in activities
other than mentioned above (i.e., other than A
& B).

D. Co-operative society having any income by
way of interest or dividends from its
investment in other co-operative society.

E. Co-operative society having income derived
by way of letting of godowns or warehouses
for storage, processing or facilitating the
marketing of commodities.

F. Co-operative society other than a housing

society or an urban consumers’ society or a
society engaged in transport business or a
society engaged in performance of any
manufacturing operations with the aid of
power, having income by way of interest on
securities or any income from house property
chargeable u/s. 22.

Eligible Amount 1. Profits and gains of business attributable to
any one or more such activities in case of
societies covered in A, B & C.

2. Relevant income out of the gross total
incomes of societies covered in D, E & F.

Relevant Conditions/Points 1. In case of societies of type referred in A(6)
& A(7) above, the rules and bye-laws of the
society should restrict the voting rights to
following classes of its members — (a) the
individuals who contribute their labour or, as
the case may be, carry on the fishing or allied
activities, (b) the co-operative credit societies
which provide financial assistance to the
society (c) the State Government.

2. With effect from A.Y. 2007-08, the
provisions of this section shall not apply in
relation to any co-operative bank other than a
primary agricultural credit society or a primary
co-operative agricultural and rural
development bank. The terms "co-operative
bank" and "primary agricultural credit society"
shall have the same meanings respectively as
assigned to them in Part V of the Banking
Regulation Act, 1949. The term "Primary co-
operative agricultural and rural development
bank" means a society having its area of
operation confined to a taluka and the
principal object of which is to provide for long-
term credit for agricultural and rural
development activities.

Extent of Deduction 1. In case of societies referred in A & B above
— 100% of the profits and gains of business
(without any limit).

2. In case of societies referred in C above —
100% of the profits and gains of business
subject to a maximum of Rs. 1,00,000/- in
case of Consumers’ Co-operative Society or
Rs. 50,000/- in other cases.

3. In case of societies referred in D & E above
— 100% of the relevant income (without any
limit).

4. In case of societies referred in F above —
100% of the relevant income provided the
gross total income of such society does not
exceed Rs. 20,000/-.

SECTION 80QQB DEDUCTION IN RESPECT OF ROYALTY

INCOME, ETC., OF AUTHORS OF CERTAIN
BOOKS OTHER THAN TEXT BOOKS

Persons Covered Individual resident in India.

Eligible Amount Income derived by author (or a joint author)
from his profession, on account of (a) any
lump sum consideration for the assignment or
grant of any of his interests in the copyright of
any book being a work of literary, artistic or
scientific nature, or (b) royalty or copyright
fees in respect of such book (whether
receivable in lump sum or otherwise).

Relevant Conditions/Points 1. In respect of income earned from any
source outside India, only so much of the
income as is brought into India in convertible
foreign exchange within 6 months from the
end of previous year or within such further
period as competent authority may allow shall
be taken into consideration.

2. If the income earned is from any source
outside India, a certificate in prescribed Form
No. 10H from prescribed authority [RBI or
authorised authority as specified in Rule
29A(2)], should be filed along with return of
income.

3. A certificate in prescribed Form No. 10CCD
and duly verified by any person responsible for
making such payment to the assessee, should
be filed along with return of income.

4. Where a deduction under this section for
any previous year has been claimed and
allowed, no deduction in respect of such
income shall be allowed under any other
provision of the Act in any assessment year.

Extent of Deduction 1. In case of lump sum consideration for (a)
Assignment or grant of any interest in the
copyright of any book or (b) Amount of
Royalty or Copyright fees (being a lump sum
consideration in lieu of all rights in the book)
— Lower of 100% of such consideration or
Rs. 3 lakhs.

2. In case of amount of Royalty or Copyright
fees not being a lump sum
consideration in lieu of all rights in the book
— Lower of (a) Royalty or Copyright Fees
(before allowing expenses attributable to such
income) not exceeding 15% of gross value of
books sold during the previous year or (b) Rs.
3 lakhs.

SECTION 80RRB DEDUCTION IN RESPECT OF ROYALTY ON
PATENTS


Eligible Amount Income by way of royalty in respect of a
patent registered on or after 1st April, 2003.

Relevant Conditions/Points 1. Assessee should be patentee (he may be a
co-owner of patent); i.e., the person or
persons, being the true and first inventor of
the invention, whose name is entered on the
Patents Register as the patentee as per the
Patents Act, 1970.

2. In respect of income earned from any
sources outside India, only so much of the
income as is brought into India in convertible
foreign exchange within 6 months from the
end of previous year or within such further
period as competent authority may allow shall
be taken into consideration.

3. If the income earned is from any source
outside India, a certificate in prescribed Form
No. 10H from prescribed authority [RBI or
authorised authority as specified in Rule
29A(2)], should be filed along with return of
income.

4. A certificate in prescribed Form No. 10CCE
verified by any person resposible for making
such payment to the assessee is required to
be filed with Return of income.

5. Where a compulsory licence is granted in
respect of any patent under the Patents Act,
1970, the income eligible for the purposes of
this section shall not exceed the amount of
royalty under the terms and conditions of a
licence settled by the Controller under that
Act.

6. Where a deduction under this section for
any previous year has been claimed and
allowed, no deduction in respect of such
income shall be allowed under any other
provision of the Act in any assessment year.

Extent of Deduction 100% of royalty or Rs. 3 lakhs, whichever is
lower.

SECTION 80U DEDUCTION IN CASE OF A PERSON WITH
DISABILITY


Eligible Amount Deduction to a person with disability out of
total Income

of certificate in the prescribed form and signed
by prescribed medical authority along with
return of income filed u/s. 139. A fresh
medical certificate may be required to be
submitted after the expiry of stipulated period

depending on the condition of disability as
specified in such certificate.

2. Medical authority means the medical
authority referred u/s. 2(p) of Persons with
Disabilities (Equal Opportunities, Protection of
Rights and Full Participation) Act, 1995
[PDEOPRFP Act] or u/ss. 2(a), (c), (h), (j) and
(o) of the National Trust for Welfare of Persons
with Autism, Cerebral Palsy, Mental
Retardation and Multiple Disabilities Act, 1999
[NTWPACMRMD Act].

3. "Disability" has the same meaning assigned
to it in Section 2(i) of PDEOPRFP Act and
includes "autism", "cerebral palsy" and
"multiple disabilities" referred to in clauses (a),
(c) and (h) of Sec. 2 of the NTWPACMRMD Act.

4. "Person with Disability" means a person as
referred to in Sec. 2(f) of the PDEOPRFP Act or
Sec. 2(j) of NTWPACMRMD Act.

5. "Person with Severe Disability" means a
person suffering from 80% or more of one or
more disabilities prescribed u/s. 56(4) of
PDEOPRFP Act or u/s. 2(o) of NTWPACMRMD
Act.

Extent of Deduction (a) Rs. 50,000/- in case of normal disability or

(b) Rs. 1,00,000/- in case of severe disability.

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