OBJECTIVE
Every assessee earning more than the basic exemption limit is eligible to seek deduction from Gross Total Income by way of deductions allowed for investments or payments made, under Chapter VI-A of the Income Tax Act. Chapter VI-A helps an assessee to reduce the overall tax burden to the extent of investment and expenses made within the ambit of law and fulfilment of prescribed conditions. In this Webinar, we shall be focusing on the provisions of Chapter VI-A which relate to Corporate Assessees.
3. Legends used in the Presentation
AOP Association of Persons
AY Assessment Year
BOI Body of Individuals
GTI Gross Total Income
PY Previous Year
RPF Recognized Provident Fund
4. Presentation Schema
Introduction
Deductions to be
made in Computing
Total Income – Sec
80A
Deductions to be
based on Income
included in GTI – Sec
80AB
Deduction not to be
allowed unless Return
Furnished – Sec 80AC
Contributions by
Companies to Political
Parties – Sec 80GGB
Tax Exemption for
Start-ups - Sec 80-IAC
Profits and Gains of
Certain Undertakings -
Sec 80-IB
Profits and Gains from
Housing Projects – Sec
80-IBA
Business of Collecting
and Processing of Bio-
Degradable Waste –
Sec 80JJA
Employment of New
Employees – Sec
80JJAA
Offshore Banking
Units and
International Financial
Services Centre – Sec
80LA
Certain Income of
Producer Companies –
Sec 80PA
5. Introduction
“Chapter VI-A - Deductions to be made in computing Total Income” provides various
deductions available from Gross Total Income in order reduce tax liability
A set of specific deductions considering various socio economic factors have been
provided under this chapter
Chapter VI-A deductions are important tools of effective tax planning
In this webinar, provisions related to deductions for Corporate Assessees are discussed
7. Deductions to be made in Computing Total Income – Sec 80A
In computing the Gross Total Income* [GTI] of an assessee, deductions specified in Sec 80C to Sec 80U shall be allowed
In any case Total Deductions under Chapter VIA shall not exceed the GTI of the Assessee i.e there can be no loss due to deductions
If any deductions are allowed to an AOP/BOI, no deduction under the same Sec shall be allowed to a member in relation to their
share in the AOP/BOI
The profits and gains allowed as deduction under Sec 10AA or under any provision of Chapter VI-A under the heading "C.-
Deductions in respect of certain incomes" in any AY, shall not be allowed as deduction under any other provisions
Such deduction shall not exceed the profits and gains of the undertaking or unit or enterprise or eligible business
No deduction shall be allowed if the deduction has not been claimed in the return of income
The transfer price of goods and services between eligible business and other business of the assessee shall be determined at the
market value of such goods or services as on the date of transfer
Where a deduction has been allowed under this Chapter for a eligible business, no deduction under Sec 35AD is permissible in
relation to such business for the same or any other AY
*Gross total income - means the total income computed in accordance with the
provisions of Income-tax Act, before making any deduction under this Chapter VI-A
8. Contd.
Part C - Deductions in respect of certain incomes under Chapter VI-A
Section Deduction
80-IA Deductions in respect of profits and gains from undertakings or enterprises engaged in
infrastructure development/ operation/ maintenance, generation/ transmission/ distribution of
power etc.
80-IAB Deduction in respect of profits and gains derived by an undertaking or enterprise engaged in
development of SEZ
80-IAC Deduction in respect of profits and gains derived by an eligible start-up from an eligible business
80-IB Deduction in respect of profits and gains from certain industrial undertakings other than
infrastructure development undertakings
80-IBA Deduction in respect of profits and gains from housing projects
80-IC Deduction in respect of profits and gains from certain undertakings or enterprises in certain special
category States [Himachal Pradesh and Uttaranchal]
80-IE Deduction in respect of profits and gains from manufacture or production of eligible article or
thing, substantial expansion to manufacture or produce any eligible article or thing or carrying on of
eligible business in North-Eastern States
9. Contd.
Section Deduction
80JJA Deduction in respect of profits and gains from business of collecting and processing of bio-
degradable waste
80JJAA Deduction in respect of employment of new employees
80LA Deduction in respect of certain income of Offshore Banking Units and International Financial
Services Centre
80P Deduction in respect of income of co-operative societies
80PA Deduction in respect of certain income of Producer Companies
80QQB Deduction in respect of royalty income, etc., of authors of certain books other than text books
80RRB Deduction in respect of royalty on patents
10. Deductions to be based on Income included in GTI – Sec 80AB
and not the actual income earned or received by the assessee
the income computed as per Income-tax provisions (except Chapter VI-A) shall alone
be regarded as income received by the assessee and which is included in his GTI
For the purpose of calculation of deductions specified in Chapter VI-A under the
heading “C - Deductions in respect of certain incomes”,
Deduction not to be allowed unless Return Furnished – Sec 80AC
Filing of return of income on or before the due date, is mandatory for availing benefit of deductions under
any provision of Chapter VI-A under the heading “C. – Deductions in respect of certain incomes”
In case of failure to file return of income on or before the stipulated due date, the undertakings would
lose the benefit of deduction
12. Contributions by Companies to Political Parties – Sec 80GGB
Eligible Deduction
Any sum ‘contributed’ in the previous year by an Indian
company to any political party or an electoral trust
Any sum paid by way of cash shall not be allowed as deduction
Deemed Contribution
Following shall also be deemed to be contribution for a
political purpose:
• A donation or subscription or payment which is likely to
effect public support for a political party
• Expenditure incurred by a company on advertisement in
any publication on behalf of a political party
Conditions
Companies Act, 2013 Conditions -
• There are no limits on amount of contribution
• Only a non-government company which has been in
existence for at least 3 years can make a contribution
• Such contribution has to be approved by a Board
resolution and shall be disclosed in the Financials
Electoral Trust A non-profit company created in India for orderly receipt of the voluntary contributions
from any person and for distributing the same to the respective political parties
13. Tax Exemption for Start-ups - Sec 80-IAC
Assessee: Eligible Start-up
Eligible Deduction: 100% of Profits and Gains from Eligible business
Years: Any 3 consecutive years at the option of the assessee within 7 years from Incorporation
• Should not be formed by way of splitting up or reconstruction of existing business
• Used Plant & Machinery should not be more than 20% of the assets. Imported used P&M
shall not be considered as used P&M
Conditions
• Incorporated on or after 1st Apr 2016 but before 1st Apr 2021
• Total Turnover does not exceed Rs. 25 crore in PY for which deduction is claimed
• Holds Certification from Department for Promotion of Industry and Internal Trade (DPIIT)
A Company or LLP engaged in eligible business
Eligible Start-up
14. Eligible Business and Other Conditions
engaged in innovation, development or improvement of products or processes or services or a
scalable business model with a high potential of employment generation or wealth creation
Business carried out by an eligible start-up
Eligible business
Deduction shall be computed as if
the income from eligible business
was the sole income of the assessee
Audit Report under Form No.
10CCB shall be submitted for the PY
in which deduction is claimed
Deduction under this Sec or Chapter VIA
shall not exceed the total profits
AO is empowered to make adjustments
to profits in case of excessive profits or
transactions not at market price
Other Conditions
15. Profits and Gains of Certain Undertakings - Sec 80-IB
Eligible Business
• Business of processing, preservation and packaging of fruits or vegetables or meat and
meat products or poultry or marine or dairy products or
• Integrated business of handling, storage and transportation of food-grains
o Operations begun on or after 1st April 2001
o In case of business of processing, preservation and packaging of meat or meat products
or poultry or marine or dairy products – operation begun on or after 1st April 2009
Quantum of Deduction
For 5 AYs beginning with the Initial AY - 100% of the profits and gains derived from such business
Thereafter for 5 AYs
- 30% of the profits and gains derived from such business (in case of companies)
- 20% in case of undertaking in a form other than company
16. Profits and Gains from Housing Projects – Sec 80-IBA
Eligible Deduction
100% of the profits and gains from the the business of developing and building housing projects
Conditions
Housing Project means a project consisting predominantly of residential units
with such other facilities and amenities as the competent authority may approve
Project is approved by the competent authority after 1st June, 2016 but on or before 31st March, 2020
Project is completed within a period of 5 years from the date of approval by the competent authority
• Where approval is obtained in respect of a project more than once, date of the first obtained approval shall be considered
• Date of completion shall be the date on which certificate of completion as a whole is obtained
Carpet area of the shops and other commercial establishments does not exceed 3% of the aggregate carpet area
Carpet
area
Net usable floor area of an apartment Excluding –
• The area covered by the external walls,
• areas under service shafts
• exclusive balcony or verandah area and
• exclusive open terrace area
However, carpet area includes the area covered by the internal partition walls of the apartment
17. Additional Conditions – Sec 80-IBA
Location of the housing project
Size on plot of land
on which the project
is located
Carpet area of the
residential unit comprised
in the housing project
Percentage of floor area ratio* to
be utilised by the project
Within the metropolitan cities of Bengaluru,
Chennai, Delhi National Capital Region
(limited to Delhi, Noida, Greater Noida,
Ghaziabad, Gurugram, Faridabad),
Hyderabad, Kolkata and Mumbai (whole of
Mumbai Metropolitan Region)
(Amendment of Union Budget 2019)
Not less than 1,000
sq. m.
Not more than 60 sq. m. Not less than 90% of the floor area
ratio permissible in respect of the
plot of land under the rules to be
made by the Central Govt. or the
State Govt. or the local authority, as
the case may be.
In any other place Not less than 2,000
sq. m.
Not more than 90 sq. m. Not less than 80% of such floor area
ratio
• Only one residential unit is allotted to an Individual, his spouse or his children
• The project is the only housing project on the plot of land
• Assessee maintains separate books of account in respect of the housing project.
• The stamp duty value of a residential unit in the housing project does not exceed Rs. 45 lakhs
(Amendment of Union Budget 2019)
* Floor area ratio means the quotient obtained by dividing the total covered area of plinth area (it is the entire
area occupied by the building including internal and external walls) on all the floors by the area of the plot of land
18. Business of Collecting and Processing of Bio-Degradable
Waste – Sec 80JJA
Eligible Business
Business 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
Eligible Deduction
100% of profits and gains from such business for a period of 5 consecutive AYs
beginning from AY relevant to the year of commencement of business
19. Employment of New Employees – Sec 80JJAA
Eligible Deduction
30% of the additional employee cost for 3 AYs from the year of such employment
On Employment of a person by a business of an assessee subject to tax audit,
• The business is not formed by way of splitting up or reconstruction
• The business is not acquired by the assessee from any person by way of
business re-organisation
• Report of Accountant in Form 10DA is filed
Conditions
Additional Employee Cost
Total emoluments* paid or payable to additional employees employed during the previous year
* Any sum paid or payable to an employee for his employment excluding PF contributions and compensation on termination
20. Additional Employee
Additional Employee
An employee employed during the PY who has the effect of increasing no. of total employees
compared to prior PY and:
• Whose emoluments are more than Rs 25,000
• For whom contribution to Employee’s Pension Scheme (EPS) is paid in full
• Who has worked for 280 days or more in the PY
• Participates in Recognised Provident Fund (RPF)
In case of business of manufacture of footwear and leather products the no. of days shall be 150 days
An employee working for days lesser than the given limit shall be considered for the deduction in the next PY
21. Offshore Banking Units and International Financial Services
Centre – Sec 80LA
Eligible Assessee
• A scheduled bank having an Offshore Banking Unit in a SEZ
• A Foreign Bank having an Offshore Banking Unit in a SEZ
• A Unit of an International Financial Services Centre (IFSC)
Eligible Income
• Income from an Offshore Banking Unit in a SEZ; or
• Income from the business permitted under Banking Regulation Act, 1949, with -
o An undertaking located in a SEZ or
o Any other undertaking which develops, develops and operates or develops,
operates and maintains a SEZ; or
• Income from any Unit of the IFSC from its business for which it has been approved for
setting up in such a Centre in a SEZ
22. Quantum and Period of Deduction
Eligible assessee Quantum and period of deduction Relevant previous year from which deduction
is allowed
A scheduled bank having an
Offshore Banking Unit in a SEZ
• 100% of such income for 5
consecutive AYs.
• Thereafter, 50% of such income
for the next 5 consecutive AYs.
Beginning with the AY relevant to the PY in which:
• the permission under Banking Regulation Act, 1949
was obtained; or
• the permission or registration under the SEBI Act, 1992
was obtained; or
• the permission or registration under any other
relevant law was obtained.
Foreign Bank having an
Offshore Banking Unit in a SEZ
Unit of an International
Financial Services Centre (IFSC)
100% of such income for any 10
consecutive AYs at the option of the
assessee, out of 15 years.
Other Conditions
• Report of Accountant in Form 10CCF shall be filed
• A copy of the permission obtained under Banking
Regulation Act, 1949 should also be furnished
Along with the return of income
23. Certain Income of Producer Companies – Sec 80PA
Producer Company having a total turnover of less than 100 crore rupees in any PY
Eligible Assessee
100% of profits and gains attributable to eligible business for AY19-20 to AY23-24
Eligible Deduction
The marketing of
agricultural produce grown
by the members; or
The purchase of agricultural implements, seeds,
livestock or other articles intended for agriculture for
the purpose of supplying them to the members; or
The processing of the
agricultural produce of
the members
Eligible Business
24. Producer Company – Sec 581A of Companies Act, 1956
A body corporate having objects or activities specified in section 581B of the
Companies Act, 1956 and registered as Producer Company under that Act.
Sec 581B - Objects of the Producer Company
(a) Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the
Members or import of goods or services for their benefit:
However, the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution;
(b) Processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members;
(c) Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;
(d) Providing education on the mutual assistance principles to its Members and others;
(e) Rendering technical services, consultancy services, training, research and development and all other activities for the
promotion of the interests of its Members;
(f) Generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and
communications relatable to primary produce;
(g) Insurance of producers or their primary produce;
(h) Promoting techniques of mutuality and mutual assistance;
(i) Welfare measures or facilities for the benefit of Members as may be decided by the Board;
(j) Any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may
promote the principles of mutuality and mutual assistance amongst the Members in any other manner;
(k) Financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending
of credit facilities or any other financial services to its Members
