Deduction in respect of Profit Gains from Industrial Undertaking other than Infrastructure development Undertaking . [Sec. 80 IB]

The deduction is available to the following undertaking or enterprises etc.

 

Sl No.Undertaking% of Profit deductiblePeriod of Deduction
(i)Ship- brought into use between 1.4.91 & 31.3.953010 years
(ii)Hotel-commenced between 1.4.97 and 31.3.2001 approved hotel in hilly are or rural area or a place of pilgrimage or in a notified area5010 years
(iii)Any other approved hotel (Hotels in the cities of Calcutta, Chennai, Delhi and Mumbai are not eligible)5010 years

 

Sl No.Classification of IndustriesPeriod of Commencement betweenDeduction of profits dividend
(i)Industrial undertaking located in an industrially backward state specified in the Eighth schedule; (see note No. 3 below the table)1.4.93 & 31.3.2002100%. for initial 5 yrs.
Thereafter 30% for 5
years. In case of
company otherwise
25%. For cooperative
society deduction is
100% of initial 5 years
and thereafter 25% of 7
years.
(ii)Industrial undertaking located in industrially backward district notified by the Central Government
-Category A
-Category B
1.4.94 & 31.3.2002100% for 5 yrs and 30%
for next 5 yrs. 100% for
3 years and 30% for next
5 yrs in case of company
(25% for others). For
cooperative society 25%
for 7 yrs. in both the
category after initial 5
years.
(iii)Any company engaged in scientific and industrial research and developmentApproved by the
prescribed authority after business for 31.3.2000 but
before 1.4.2003
100% of the profits
derived from such
business for 10 years.
(iv)Undertaking which begins commercial production of mineral oil –
a) in North Eastern Region.
b) in other Regions Undertaking which begins refining of mineral oil.
Before 1.4.97 on or after 1.4.97.On or after 1.10.98100% for the first 7
consecutive assessment
years including the
initial assessment years
(v)Undertaking engaged in developing and building housing projects approved by a local authority–
size profits derived from of the plot of land minimum 1 acre and residential unit built up of 1000 sq. ft. where such residential units other than cities of Delhi/Mumbai or within 25 kms. for the
municipal limits of these cities and 1500 sq. ft. at any other place.
1.10.98 & 31.03.2003100% of the profit
derived from such
business
(vi)Industrial undertaking deriving profit from the business of setting up and operating a cold chain facility for agricultural produce.1.4.99 & 1.03.2003100% for initial 5 yrs.
and thereafter 30% for
5 years in case of company (25% for others). For Cooperative Society
cooperative society after initial 5 yrs 100%, 7 years @ 25%
(vii)Undertaking engaged in integrated business of handling, storage and transportation of food grainsOn or after 1.04.2001100% for initial 5 yrs.
Thereafter 30% for 5
years for company (25%
for others).
(viii)Finance Act, 2002, inserted Sec. 80IB(7A) and Sec.80IB(7B) allowing deduction in case of any multiplex theatre and convention centers
w.e.f. AY 2003-04 as under :
– Multiplex theatre – Convention Centre
1.4.2007 and ending
31.3.2012
50% of the profits of 5
consecutive years
beginning from the
initial assessment year.
1.4.2007 and ending
31.3.2012
50% of the profits of 5
consecutive years
beginning from the
initial assessment year

Amendments in section 80-IB
(A) Rationalising the provisions of deduction under section SO-IB(IO) developing and building housing projects – Not to apply to any undertaking which executes the housing project as a works contract awarded by any other person (including Central or State Government) [Section 80-IB(10)]
Sub-section (10) of section 80-IB of the Income-tax Act, 1961 provides for 100% deduction of the profits derived by an undertaking from developing and building housing projects, This benefit is available subject to the following conditions:

(a) The project is approved by a local authority before 31-3-2007. (See amendment below).

(b) The project is constructed on a plot of land having a minimum area of one acre.

(c) The built-up area of each residential unit should not exceed 1,000 sq. ft. in the cities of Delhi and Mumbai (including areas falling within 25 kms. of municipal limits of these cities) and 1,500 sq. ft. in other places.

(d) The built-up area of the shops and other commercial establishments included in the housing project should not exceed 5% of the total built-up area of the housing project or 2,000 sq. ft. whichever is less.

(e) The project has to be completed within 4 years from the end of the financial year in which the project is approved by the local authority.

Sl No.Undertaking% of Profit deductiblePeriod of Deduction
(i)Ship- brought into use between 1.4.91 & 31.3.953010 years
(ii)Hotel-commenced between 1.4.97 and 31.3.2001 approved hotel in hilly are or rural area or a place of pilgrimage or in a notified area5010 years
(iii)Any other approved hotel (Hotels in the cities of Calcutta, Chennai, Delhi and Mumbai are not eligible)5010 years

Leave a Reply