DEDUCTION IN RESPECT OF

CERTAIN INCOME

Sixth Semester Bcom

 DEDUCTION FOR CERTAIN
INCOMES
• 1. Deduction in respect of profits and gains from undertakings or enterprise
engaged in infrastructure development
• 2. Deduction in respect of profits and gains by an undertakings or enterprise
engaged in the development of Special Economic Zone
• 3. Deduction in respect of profits and gains from specified business
• 4. Deduction in respect of profits and gains other than infrastructure
development undertakings
• 5. Deduction in respect of profits and gains from housing project
• 6. Deduction in respect of profits and gains from undertakings or enterprise in
special category states
• 7. Deduction in respect of profits and gains in respect of certain undertakings in
North Eastern states
 CONTD…
• 8. Deduction in respect of profits from the business of collecting and processing of bio-
degradable waste
• 9. Deduction in respect of employment of new employees
• 10. Deduction in respect of certain incomes of offshore banking units or international
financial services Centre
• 11. Deduction in respect of certain inter- corporate dividends
• 12. Deduction in respect of income of co – operative societies
• 12. Deduction in respect of certain income of producer companies
• 13. Deduction in respect of Royalty Income of Authors
 DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM
UNDERTAKINGS OR ENTERPRISE ENGAGED IN INFRASTRUCTURE
DEVELOPMENT

• Deduction will be allowed from gross total income to an assesse in respect of

profits and gains derived from any business of :
Infrastructure facility
Section:80IA
Industrial park
Generation and distribution of power
Reconstruction or revival of a power generating plant
 INFRASTRUCTURE FACILITY
The enterprise is carrying on the business of providing infrastructural facilities and
owned by a company or consortium of companies registered in India or by an
authority or a board or a corporation or any such other body.
Infrastructure facility means a road including toll road, a bridge or a rail system, a
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 waterways or inland port or navigation channel in the sea.
• Deduction:100% of such profits for 10 assessment years.(No deduction
for undertakings which start operations after 31.03.2017)
 INDUSTRIAL PARK OR SPECIAL
ECONOMIC ZONE

• Any undertaking which develops or operates an industrial park

after 1.4.2007 but before31.3.2011 or special economic zone in
between 1.4.2007 and 31.3.2006.

• Deduction: 100% of such profits for 10 assessment years.

 GENERATION AND
DISTRIBUTION OF POWER
• An industrial undertaking engaged for generation or generation and
distribution of power if it begins to generate power after 31.3.1993 but
before 1.4.2017, or starts transmission or distribution after 31.3.1999 but
before 1.4.2017; or undertakes substantial renovation and modernization
of lines after 31.3.2004 but before 1.4.2017.

Deduction: 100% of such profits for ten assessment years.

 RECONSTRUCTION OR REVIVAL OF
POWER GENERATION PLANT
• Reconstruction or revival of power generation plant of a company formed before 30.11.2005
with majority equity participation by public sector companies for the purposes which begins to
generate or transmit or distribute power before 31.3.2011.

The above deductions are allowed only on the assessee fulfilling the restrictions and conditions
laid down by the government and CBDT for the computation of profits for deduction, audit of
accounts, amalgamation/de-merger, withdrawal of deduction, etc. in this respect.

Deduction: 100% of such profits for ten assessment years.

 DEDUCTION FOR PROFITS AND GAINS OF AN
UNDERTAKING ENGAGED IN DEVELOPMENT OF
SPECIAL ECONOMIC ZONE
Sec. 80 IAB

• Developer of a Special Economic Zone under the Special Economic Zones Act, 2005 can
claim the following deduction.
• Deduction:
• 100% of such profits for 10 years or at the option of the assessee, 100% of such profit of
any 10 consecutive assessment years out of first 15 years. (No deduction for
undertakings which start operations after 31.03.2017)
• A Developer who claimed deduction u/s 80 IA, shall be entitled to deduction only for the
unexpired period of ten consecutive assessment years.
 DEDUCTION FOR PROFITS AND
GAINS FROM SPECIFIED BUSINESSES
• Sec. 80 IAC
• Eligible start ups can claim deduction of the profits from such businesses for a period of 3consecutive assessment
years.
• Deduction: 100% for 3 years
• Eligible business means any venture which involves innovation, development, deployment or commercialization
of new products, processes or services driven by technology or intellectual property or a limited liability
partnership.
• Eligible start up means a company incorporated on or after 1.4.2016 and before 1.4.2022
• The turnover of the business shall not be more than 100 crore and the business must have a certificate of
eligibility issued by the Central Government. Other conditions specified in this respect must be complied with.
• i) Seven initial assessment years - 100% for any 3 assessment years.
• This deduction is allowed subject to restrictions and conditions laid down in this respect.
 DEDUCTION FOR PROFITS OF UNDERTAKINGS OTHER THAN
INFRASTRUCTURE

Section 80- IB

Subject to specific conditions in this respect

• 1) Commercial production of mineral oil in between 31.03.1997 and
1.4.2017

• Deduction 100% for 7 years

• 2) Refining of mineral oil in between 30.9.1998 and 1.4.2012

• Deduction - 100% for 7 years

 CONTD…..
• 3)Commercial production of natural gas in between 31.3.2009 and 1.4.2017
• Deduction - 100% for 7 years
• 4) Housing projects in between 30/09/1998 and 31/03/2008
• Deduction - 100% for 7 years
• 5) Integrated business handling, storage and transportation of food grains commenced after 31.03.2001
• Deduction - 100% for 5 years
30% for companies and 25% for others for next 5 years
• 6) Processing preservation and packaging of fruits and vegetables w.e.f. 2005-06
• Deduction 100% for 5 years30% for companies and 25% for others for next 5 years
• 7) Processing preservation and packaging of meat, meat products, poultry products, marine products or dairy products (any where in India
except specified areas) in between 1.4.2008 to 31.3.2013.
• Deduction100% for 5 years, 30% for next 5 years
 DEDUCTION FOR PROFITS OF HOUSING
PROJECTS
(FROM A.Y. 2017-18)
• Sec. 80IBA

• Subject to conditions, any assessee engaged in developing and building

approved residential housing projects in between 1.6.2016 and
31.3.2022 shall be eligible for 100% deduction of profits from such
ventures, subject to specific conditions.
 DEDUCTION IN RESPECT OF PROFITS AND
GAINS FROM UNDERTAKING OR ENTERPRISE IN
SPECIAL CATEGORY STATES
• Sec 801C

• The undertaking or enterprise in special category states [North-Eastern

States, Himachal Pradesh or the State of Uttranchal] is eligible for
deduction up to 100% of profits for initial ten assessment years. In the
case of Himachal Pradesh or Uttranchal, 100% for five years and 30%
for companies (for others, 25%) for the next five years.
 DEDUCTION IN RESPECT OF PROFITS AND GAINS
OF UNDERTAKINGS IN NORTH EASTERN STATES

• Sec. 80 IE
• Undertaking which begins manufacturing or production of goods or undertakes
substantial expansion or provision of services, during 1.4.2007 and 31.3.2017 or in
North Eastern states can claim deduction (subject to conditions) from gross total
income as follows.

• Deduction: 100% for 10 assessment

 PROFITS FROM BUSINESS OF PROCESSING
OF BIO-DEGRADABLE WASTE
• Sec. 80JJA
• Any assessee can claim 100% deduction for five assessment years, for
the profits derived from the 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 producing bio-gas
or making pellets or briquettes for fuel or organic manure.
 DEDUCTION IN RESPECT OF
EMPLOYMENT OF NEW
WORKMEN
• Sec. 80JJAA
• Any assessee engaged in the manufacture or production of any article or thing is entitled to
claim deduction in respect of the employment of new workmen as follows.
• Deduction - 30% of additional wages paid to the new regular workmen employed by the
assessee in the previous year for three assessment years including the assessment year
relevant to the previous year in which such employment is provided.
• This deduction is allowed subject to the following conditions.
The industrial undertaking is not formed by splitting up or reconstruction of an existing
undertaking or amalgamation with another industrial undertaking.
The assessee furnishes along with the return of income the audit report giving the prescribed
particulars.
 CONTD…
• Additional wages - means the wages paid to the new regular workmen in excess of 50 workmen
employed during the previous year.

• In the case of existing undertaking, the additional wages shall be nil if the increase in number of
regular workmen employed during the year is less than 10% of existing number of workmen as on
the last day of preceding year.

• The total emoluments of the employee shall not be more than 25,000.

• Regular workmen - does not include a casual workman, a workman employed through contract
labour or any other workman employed for a period of less than 300 days during the previous year.
 INCOME OF OFFSHORE BANKING UNITS OR
INTERNATIONAL FINANCIAL SERVICES
CENTRE
• 80LAA
• Scheduled bank or any bank incorporated outside India having an offshore banking

unit in SEZ or a unit of an International Financial Service Centre, deriving profits

from such businesses shall be allowed 100% deduction for 5 assessment years and
thereafter at the rate of 50% of such income for five consecutive assessment years.
In the case of an International Financial Service Centre, 100% deduction for 10
assessment years.
 DEDUCTION IN RESPECT OF DIVIDEND
RECEIVED BY A DOMESTIC COMPANY FROM
ANOTHER COMPANY
• Sec. 80M
• When a company receives dividend on account of its shareholding in another
company, such dividends are known as inter-corporate dividends. With effect
from the 1.4.2020 inter-corporate dividend received by a company is deductible
under section 80M, if the same is distributed as dividend to its own
shareholders. Such inter-corporate dividends are deductible from gross total
income, if it is distributed as dividend to its shareholders, at least one month
before the due date of filing return.
• The dividend received may be from domestic company, foreign company or
business trusts. Dividend received may be interim dividend final dividend or
deemed dividend
 INCOME OF CO-OPERATIVE
SOCIETIES
• Sec. 80P

• A co-operative society can claim 100% deduction from the

gross total income derived from prescribed businesses and
subject to specific conditions laid down in this respect.
 DEDUCTION FROM INCOME OF A
PRODUCER COMPANY
• Sec. 80PA
• With effect from the assessment year 2019-20, a producer company whose total turnover
during the previous year is less than 100 crore, can claim 100% deduction for its income from
eligible business.

• This deduction is available up to the assessment year 2024-25.

• If the company is eligible for any other deduction under Chapter VI A, so much of deduction
cannot be claimed under section 80PA.
 ROYALTY INCOME OF AUTHORS
• Sec. 80QQB
An individual who is resident in India and being an author (Including a joint author) of a
book being a work of literary, artistic or scientific nature is eligible for a deduction of 100%
of such income or 3,00,000 whichever is less. (Royalty shall not exceed 15% of the value of
books for the purpose of this section. Related expenses can be deducted)
 If the income is earned outside India, the income brought into India in convertible foreign
exchange within six months from the end of the previous year shall be considered for the
above exemption.
'Books' shall not include brochures, commentaries, diaries, guides, journals, magazines,
newspapers, pamphlets, text books for schools, tracts and other publications of similar
nature, by whatever name called. The expression 'literary work covers work which is
expressed in print or writing, irrespective of its style or quality.
 ROYALTY ON PATENTS

Sec. 80RRB

An individual, resident in India who is a patentee receiving income in respect of a

patent registered after 31.3.2003 under the Patents Act, 1970, is entitled to a
deduction of 100%of such income or 3,00,000 whichever is less.

 If the income is earned outside India, the income brought into India in convertible
foreign exchange within six months from the end of the previous year shall be
considered for the above exemption.
 INTEREST ON SAVINGS DEPOSIT
• Sec. 80TTA
• Any individual or HUF can claim a deduction of 10,000 in respect of income in the form of interest on
savings deposits with a banking company, co-operative society or a post office.

• This deduction is not available for interest on time deposits or fixed deposits. This deduction is not
available to a senior citizen

• Interest on Post office savings bank account gets tax exemption up to 3,500 in the case of individual
accounts and 7,000 in the case of joint accounts, u/s 10(15). If an assessee has interest from post office
more than this exemption limit, it can be deducted under sec. 80TTA but not exceeding 10,000.
 INTEREST ON DEPOSITS

• [Sec. 80TTB]An individual being a senior citizen of 60 years

of age, can claim a deduction up to 50,000 in respect of interest
on deposits with a banking company, co-operative society or a
post office. Interest on savings deposits or fixed deposits is
eligible for deduction under section 80TTB.
 DEDUCTION IN THE CASE OF A
PERSON WITH DISABILITY
• Sec. 80U
• An individual, being a resident, who, at any time during the previous year, is certified by the
medical authority to be a person with disability, can claim a deduction from gross total
income, a sum of 75,000 in the case of normal disability and 1,25,000 in the case of severe
disability.

• The assessee claiming deduction shall furnish a copy of certificate issued by the medical
authority in the prescribed form along with return of income
 CNTD…

• Normal disability :- For tax purposes, disability means 40% or more

disability of blindness, low vision, leprosy cured, hearing impairment,
locomotor disability, mental retardation, mental illness.

• Severe disability:- 80% or more disability is considered as severe

disability.
 DOMESTIC COMPANY AND
FOREIGN COMPANY
A domestic company means an Indian company or any other company which has made the prescribed arrangements for
declaration and payment, within India, of the dividends payable out of such income. Sec.2. (22A)

Here the prescribed arrangements are:

 The share-register of the company for all the shareholders shall be maintained at the principal place of business within
India, in respect of any assessment year from a date not later than 1st April of such year.

 The general meeting for passing accounts of the previous year and declaring any dividends in respect thereof shall be
held only at a place within India.

 The dividend declared, if any, shall be payable only within India to all shareholders.

Foreign company means a company which is not a domestic company.

 TAX HOLIDAY

The period during which an assessee gets exemption from tax payment is called "tax
holiday.

The Government allows tax holiday to different types of business ventures, from time to
time.

Exemptions are also given in view of the social or geographical significance of projects,
extra efforts and risk required to build up business, etc.

Tax holiday is allowed to such ventures under 80IB, 801C, 80ID,

 ADDITIONAL PROBLEM 1
• Compute the deduction allowable under section 80GG of the Income Tax Act to an
individual having the following income:

• Business income 6,20,000

• Interest on Debentures 25,000

• Rent paid by him for a house occupied by him for the purpose of his residence 9,000 p.m.
He deposited 25,000 during the previous year in PPF
 ROYALTY INCOME

• From the following information compute the total income of author:

• 1. Royalty on a book for college students on Rs. 5,00,000@ 20% Rs. 1,00,000

• 2.Expenses incurred to earn the royalty Rs.10,000

• 3. Other income Rs. 5,00,000

 ANSWER
• Deduction u/s 80QQB:
• Royalty on 5,00,000 @ 15% 75,000
• Less Expenses 10,000

65,000
Total Income
Royalty Income ( 1,00,000 – 10,000) 90,000
Other Income 5,00,000
5,90,000
Less Deduction u/s 80QQB
regarding royalty income 65,000
5,25,000
 PROBLEM 2
• Compute the amount deductible u/s 80QQB from the following

Name of Assessee A B C

Royalty received 1,20,000 @20% on 4,00,000 @16% on book 9,00,000,lump-sum

book price price
Expenses incurred to get 20,000 30,000 3,00,000
royalty
Amount relate to India India USA

Amount received in 5,00,000

convertible foreign Exchange
till 30.09.21
 PROBLEM 3
• Gross total income of Mrs. Sita is Rs. 6,75,000
• She deposited in RPF 50,000
• She paid donation to a political party 10,000 by cheque and Prime
Ministers National Relief Fund 15,000 by cheque
• She paid medical insurance premium on the health of her spouse aged 47
years 27,000 by cheque
• Compute her total income for assessment year 2024 -25