ASSESSMENT OF COMPANIES

Indian Tax Structure

The Indian tax structure is a complex framework comprising direct and indirect taxes
levied by the central and state governments. This system has evolved significantly over
the years to support economic growth, social welfare, and fiscal stability.

Direct taxes are imposed directly on individuals and entities' income and profits.
Income tax is the primary direct tax, with progressive rates based on income slabs.
Corporate tax applies to the profits of companies, with rates varying based on business
type and turnover.

Indirect taxes are levied on goods and services, typically at the point of consumption.
GST, introduced in 2017, replaced a complex web of indirect taxes with a unified, multi-
tiered tax structure. Customs duty is imposed on imports and exports to regulate
international trade.

The Indian tax administration is managed by various authorities, including the Income
Tax Department, Central Board of Direct Taxes (CBDT), and GST Council. Compliance
procedures, tax assessments, and dispute resolution mechanisms are integral to the tax
system's functioning.

Challenges such as tax evasion, compliance complexities, and the need for reforms
persist. Efforts towards simplification, transparency, and international cooperation are
ongoing to enhance the efficiency and effectiveness of the Indian tax regime.

Outline of Income Tax Act 1961

In India, this tax was introduced for the first time in 1860, by Sir James Wilson in order
to meet the losses sustained by the Government on account of Military Mutiny of 1857.
Thereafter, several amendments were made in it from time to time. At last, in 1886, a
separate Income Tax Act was passed. This Act remained in force up to 1917, with
various amendments from time to time. In 1918, a new Income Tax Act was passed and
again it was replaced by another new Act which was passed in 1922. This Act, remained
in force up to the assessment year 1961-62 with numerous amendments.

The Income Tax Act of 1922 had become very complicated on account of innumerable
amendments. The Govt of India, therefore, referred it to the law commission in 1956
with a view to simplify and prevent the evasion of income tax. The law commission
submitted its report in September 1958, but in the meantime the Government of India
had appointed the Direct Taxes Enquiry committee to suggest measures to minimise
inconveniences to assess and to prevent evasion of tax. This committee submitted its
report in 1959. in consultation with the Ministry of Law finally the Income Tax Act
1961 was passed.

The Income Tax Act, 1961 has been brought into force with effect from 1 st April 1962. it
applies to the whole of India. Since 1962 several amendments of far reaching nature
have been made in the Income Tax Act by the Union Budget every year, which also
contains Finance bill. After it is passed by the House of Parliament, and receives the
assent of the president of India, it becomes the Finance Act. Besides this, amendments
have also been made by various amendment Acts, for instance, Taxation Law
Amendment Act 1984, Direct Tax Law Act 1989, The Taxation Law Act 1991….

CBDT is the apex body of the Income Tax Department. It is the supreme authority and
administrative head of the income tax department. It functions as a part of the Finance
Ministry of the Government of India. CBDT is empowered to frame rules subject to the
control of the Central Government for the administration of the income tax.

TYPES OF COMPANIES

Company: As per section 2(17), Company means:

 any Indian company, or

 any body corporate incorporated by or under the laws of a country outside India,
or
 any institution, association or body which was assessed as a company for any
assessment year under the Income-tax Act, 1922 or was assessed under this Act
as a company for any assessment year upto 1970-71.
  Any institution, association or body, whether incorporated or not and whether
Indian or Non-Indian, which is declared by a general or special order of CBDT to
be a company.

A Company in which the Public are substantially interested (Section 2(18) :

Section 2(18) of the Income-tax Act, has defined "a company in which the public
are substantially interested". It includes:

1. A company owned by Government or Reserve Bank of India.

2. A company having Govt. participation i.e. A company in which not less
than 40% of the shares are held by Government or the RBI or a
corporation owned by the RBI.
3. Companies registered under section 25 of the Indian Companies Act,
1956: Companies registered under section 25 of the Companies Act, 1956
are companies which are promoted with special object such as to promote
commerce, art, science, charity or religion or any other useful object and
these companies do not have profit motive. However, if at any time these
companies declare dividend they would loose the status of a company in
which the public are substantially interested.
4. A company declared by the CBDT: It is a company without share capital
and which having regard to its object, nature and composition of its
membership or other relevant consideration is declared by the Board to
be a company in which public are substantially interested.
5. Mutual benefit finance company, where principal business of the
company is acceptance of deposits from its members and which has been
declared by the Central Government to be a Nidhi or a Mutual Benefit
Society.
6. A company having co-operative society participation: It is a company
in which at least 50% or more equity shares have been held by one or
 more co-operative societies.
7. A public limited company: A company is deemed to be a public limited
company if it is not a private company as defined by the Companies Act,
1956 and is fulfilling either of the following two conditions:
a. Its equity shares were listed on a recognised stock exchange, as on
the last day of the relevant previous year; or
b. Its equity shares carrying at least 50% of the voting power (in the
case of an industrial company the limit is 40%) were beneficially
held throughout the relevant previous year by Government, a
statutory corporation, a company in which the public is
substantially interested or a wholly owned subsidiary of such a
company.

Widely held company:

It is a company in which the public are substantially interested.

Closely held company: It is a company in which the public are not substantially

interested. A closely-held corporation is owned and controlled by a small

group of owners or shareholders. These shareholders hold the shares of stock
necessary to elect most or all of the directors. Often, shareholders in a closely-
held corporation will elect themselves to serve as directors and appoint
themselves as officers. Family-owned businesses commonly organize as
closely-held corporations. In these entities, members of a single family own
most or all of the outstanding shares. They also serve as directors and officers
of the business.

Indian company [Section 2(26)]:

'Indian Company' means a company formed and registered under the Companies
Act, 1956 and includes—
 1. a company formed and registered under any law relating to companies
formerly in force in any part of India (other than the State of Jammu and
Kashmir and the Union Territories;
i. a corporation established by or under a Central, State or Provincial
Act;
ii. any institution, association or body which is declared by the Board
to be a company;
2. in the case of the state of Jammu and Kashmir, a company formed and
registered under any law for the time being in force in that State;
3. in the case of any of the Union territories of Dadra and Nagar Haveli, Goa,
Daman and Diu, and Pondicherry, a company formed and registered under
any law for the time being in force in that Union Territory.

Provided that the registered or, as the case may be, principal office of the
company, corporation, institution, association or body, in all cases is in India.

Domestic company [Section 2(22A)]:

A domestic company means an Indian company or any other company which in

respect of its income, liable to tax under the Income-tax Act, has made the
prescribed arrangements for the declaration and payment within India, of the
dividends (including dividends on preference shares) payable out of such
income.

Thus, all Indian Company are treated as Domestic Company but all Domestic
Company are not Indian Company.

If a Foreign Company makes prescribed arrangements for payment of dividends

in India it shall be treated as Domestic Company.

Foreign company [Section 2(23A)]:

Foreign company means a company which is not a domestic company, i.e. a

company registered outside India in any other foreign country.

The Foreign Company may be treated as Domestic Company if such company

makes prescribed arrangement in India as per Rule 27.
Rule 27:

The arrangements referred to in sections 194 and 236 to be made by a company

for the declaration and payment of dividends ( including dividends on
preference shares) within India shall be as follows :

1. The share-register of the company for all shareholders shall be regularly

maintained at its principal place of business within India, in respect of any
assessment year from a date not later than the 1st day of April of such
year.
2. The general meeting for passing the accounts of the previous years
relevant to the assessment year and for declaring any dividends in respect
thereof shall be held only at a place within India.
3. The Dividend declared , if any, shall be payable only within India to all
shareholder

Investment Company:

Investment company means a company whose gross total income consists

mainly of income which is chargeable under the heads Income from house
property, Capital gains and Income from other sources.

Residential status of Company

The taxability of a person in India depends upon his residential status in India
for any particular financial year. The residential status of different types of
persons viz an individual, a firm, a company etc is determined differently. For
the purpose of income tax in India, the income tax laws in India classifies
taxable persons as:

 A resident and ordinarily resident (ROR)

 A resident but not ordinarily resident (RNOR)
 A non-resident (NR)

Residential Status of a Company

A company would be resident in India in the following circumstances :

 If it is an Indian Company
 The place of effective management in the previous year is in India.

Note: Place of effective management means a place where management and

commercial decisions that are necessary for the conduct of business or entity
are taken.

Section 5 provides the scope of the total income of the assessee because the incidence of
tax on any person depends upon his residential status. The scope of total income of an
assessee depends upon the following three important considerations:

(i) the residential status of the assessee.

(ii) the place of accrual or receipt of income, whether actual or deemed and

(iii) the point of time at which the income had accrued to or was received by or
on behalf

Tax incidence vis-a-vis residential status of all assesses is indicated in the

following table.

Where tax incidence arises in case of Resident or Resident but not Non-
Resident & Ordinarily Resident Resident
 Ordinarily
(only Individual or HUF)
Resident

Income received in India (Whether accrued

TAXABLE TAXABLE TAXABLE
in or outside India)

Income deemed to be received in India

TAXABLE TAXABLE TAXABLE
(Whether accrued in or outside India)

Income accruing or arising in India

TAXABLE TAXABLE TAXABLE
(Whether received in India or outside India)

Income deemed to accrue or arise in India

TAXABLE TAXABLE TAXABLE
(Whether received in India or outside India)

Income received and accrued outside India

NOT
from a business controlled or a profession TAXABLE TAXABLE
TAXABLE
set up in India

Income received and accrued outside India

NOT
from a business controlled from outside TAXABLE NOT TAXABLE
TAXABLE
India or a profession set up outside India

Income earned and received outside India

NOT
but later on remitted to India (whether tax NOT TAXABLE NOT TAXABLE
TAXABLE
incidence arises at the time of remittance)

Computation of Tax on Companies’ income

• In case of domestic company:

 If the total turn over or gross receipts in the previous year, does not exceed 400
crore rupees, the tax shall be charged @25% instead of 30% for the assessment
year
• Surcharge : 7% if the income is between 1-10 crore and 12% if total income
exceeds 10 crores
• Marginal relief: where total income exceeds;
 • One crore rupees but does not exceed 10 crore rupees, the total amount
payable as income tax and surcharge on such income shall not exceed the
total amount payable as income tax on a total income of one crore rupees
by more than the amount of income that exceeds one crore rupees.
• Where the total income exceeds 10 crore rupees, the total amount
payable as income tax and surcharge on such income shall not exceed the
total amount payable as income tax and surcharge on a total income of ten
crore rupees by more than the amount of income that exceeds 10 crore
rupees.
• Health and education cess : 4% on the amount of income tax and surcharge.

• In case of a company other than a domestic company:

• Surcharge : 2% if the income is between 1-10 crore and 5% if total income

exceeds 10 crores
• Marginal relief: where total income exceeds;
• One crore rupees but does not exceed 10 crore rupees the total amount
payable as income tax and surcharge on such income shall not exceed the
total amount payable as income tax on a total income of one crore rupees
by more than the amount of income that exceeds one crore rupees.
• Where the total income exceeds 10 crore rupees, the total amount payable
as income tax and surcharge on such income shall not exceed the total
 amount payable as income tax and surcharge on a total income of ten
crore rupees by more than the amount of income that exceeds 10 crore
rupees.
• Health and education cess : 4% on the amount of income tax and surcharge.

MAT
• There are specific provisions under the Income Tax Act 1961, under which the
MAT is collected from every company. It is calculated under section 115JB of
the Income Tax Act.
• MAT is calculated at the rate of 15% (plus surcharge and HEC as applicable)of
the book profit of the taxpayer, and as per section 115JB of the income tax act,
book profit is calculated.
• Provisions of Section 115JB are not applicable if
• Any income that is earned through the life insurance business. [Section
115JB(5A)]
• Any shipping income liable to tonnage taxation.
• A person is a resident of a country, or a specified territory with which
India has an agreement referred to in section 90(1) and the person does
not have a permanent establishment in India in accordance with the
provisions of such contract.
• A person is a resident of a country with which India does not have an
agreement, and the person is not needed to seek registration under any
law for the time being in power relating to the companies.
MAT Credit
• When a company is liable to pay a tax under the MAT instead of regular income
tax, the company is allowed to claim a credit of MAT paid over the regular Tax.
According to the provision in section 115JAA, the company can carry forward
and adjust the MAT credit in subsequent years.
• MAT Credit is the amount of the difference between the MAT amount paid and
the amount payable under normal tax. When the tax is paid on the standard
computation of a company’s income, it is known as normal tax.
• Previously the MAT credit was allowed to carry forward for a period of 10 years,
but from AY 2018-19, it can be carried forward for 15 assessment years.
 • MAT credit is allowed to Set Off when tax is paid on the regular income under the
provisions of income tax instead of MAT. Set off is granted to the amount of
difference between the tax on the total income and tax which would have been
payable as per MAT under section 115JB.
• No interest is paid on the MAT credit to the company.

SET OFF AND CARRY FORWARD OF LOSSES

SET OFF OF LOSSES

1 Loss from House Property a) Income from any other house

property.
b) Any other head of income
However w.e.f AY 2018-19, set
off of loss against any other
head is restricted to two lakh
Rupees for any Assessment
Year.

2 Loss from Business or Profession a) Income from any other business

or profession
b) Any other head except Income
under the head salary.

3 Loss from Speculation a) Income from Speculation

4 Loss of specified business a) Income from any other

specified business

5 Short Term Capital Loss a) Short Term Capital Gain

b) Long Term Capital Gain

6 Long Term Capital Loss a) Long Term Capital Gain

7 Loss from activity of owning and a) Income from activity of owning

maintaining horse races and maintenance of horse race.

CARRY FORWARD AND SET OFF OF LOSSES:

 1 Loss from House Property In the following 8 years, in Income from
House Property

2 Loss from Business or Profession In following 8 years, income from

business or profession

3 Loss from Speculation In following 4 years, Income from

Speculation

4 Loss from Specified Business In following 4 years, Income from any

other specified business

5 Short term Capital Loss In the following eight years.

a) Short Term capital Gain

b) Long Term Capital Gain

6 Long Term Capital Loss In the following 8 years, Long Term

Capital Gain

7 Loss from activity of owning and In the following 4 years income from
maintaining horse race owning and maintaining horse race.

CARRY FORWARD OF LOSSES OF CERTAIN COMPANIES (Section79):

New Provisions of Section 79 as effective from 1st April 2020
Provisions of Section 79 apply to a company, not being a company in which the public
are substantially interest.
Condition:
To carry forward losses and set off against the income of the previous year, the
following condition needs to be fulfilled:
51% of the voting power of the company are beneficially held, as on the last day of the
previous year in which the loss is sought to be set off, by the same person who holds at
least 51% of the shares on the last day of the financial year in which the loss was
incurred.

Situation of carry forward and set off of losses in case of eligible start-ups
Even if the above-referred condition is not satisfied by the 'eligible start-ups', the loss
incurred in any year (prior to the previous year) shall be allowed to be carried forward
and set off against the income of the previous year, if the following condition is satisfied:
All the shareholders having voting power on the last day of the previous year in which
loss was incurred continue to be holding shares on the last of day of the previous year in
which income is to be set off.
The above relief is available in case the loss is incurred during the period of 7 years
beginning from the year of incorporation.

Section 79(1) not apply in certain cases:

a) When the change in voting power and shareholding takes place in a previous
year on account of the death of the shareholder.
b) When the change in voting power and shareholding takes place in a previous
year on account of share transfer resulted due to gift to any relative of the
shareholder making such gift.
c) In case of a change in shareholding of an Indian company (being a subsidiary of a
foreign company) due to demerger or amalgamation of a foreign company. The
demerger or amalgamation is undertaken with the condition that 51%
shareholding of amalgamating or demerged foreign company would continue to
be the shareholders of the amalgamated or the resulting foreign company.
d) When the change in shareholding takes place based on a resolution plan which is
approved under the Insolvency and Bankruptcy Code.
e) When the company and it is subsidiary (including a subsidiary of such
subsidiary) in case:
i) The Tribunal (on application under Section 241) has suspended the Board
of Directors of the company and has appointed new directors; and
ii) Change in shareholding of the company and its subsidiary (including a
subsidiary of such subsidiary) based on resolution plan approved by the
tribunal under Section 242 of the companies act.

No set-off of loss against undisclosed income discovered during search (Section

79 A)
The Finance Act, 2022 has inserted a new section 79A to the Income-tax Act to restrict
set off of losses consequent to search, requisition and survey. It has been provided that
in case the total income of any previous year of an assessee includes any undisclosed
income detected because of:
(a) Search initiated under section 132; or
(b) A requisition made under section 132A; or
(c) A survey conducted under section 133A other than under section 133A(2A).
Then, no set-off of any loss, whether brought forward or otherwise, or unabsorbed
depreciation, shall be allowed against such undisclosed income while computing the
total income of the assessee for such previous year.

For this provision, the ‘undisclosed income’ means:

a) Any income of the previous year represented, either wholly or partly, by any
money, bullion, jewellery or other valuable article or thing or any entry in the
books of account or other documents or transactions found during a search
under section 132 or a requisition under section 132A or a survey under section
133A other than under section 133A(2A), which has:
i) not been recorded on or before the date of search or requisition or survey
in the books of account or other documents maintained in the normal
course relating to such previous year; or
ii) not been disclosed to the Commissioner before the date of search or
requisition or survey, as the case may be.
b) Any income of the previous year represented, either wholly or partly, by any
entry in respect of an expense recorded in the books of account or other
documents maintained in the ordinary course relating to the previous year
which is found to be false, and which would not have been found to be so, had the
search not been initiated or the survey not been conducted or the requisition not
been made.

Change in shareholding due to strategic disinvestment (Section 79 (2)

With effect from Assessment Year 2022-23, The Finance Act, 2022 has introduced one
more situation wherein the provisions of section 79 shall not apply. It has been
provided that the section 79 shall not apply to an erstwhile Public Sector Company
(PSU), subject to condition that the ultimate holding company of such erstwhile PSU,
immediately after completion of the strategic disinvestment, continues to hold, directly
or through its subsidiary or subsidiaries, at least 51% of the voting power of such PSU
in aggregate.
However, this relaxation shall cease to apply from the previous year in which the
ultimate holding company ceases to hold, directly or through its subsidiary or
subsidiaries, 51% of the voting power of the erstwhile public sector company. If the
relaxation ceases to apply in any previous year, the provisions of section 79 shall apply
for such previous year and subsequent previous years.
The erstwhile public sector company shall have the same meaning as assigned to it in
clause (ii) of the Explanation to clause (d) of section 72A(1).
Order of Set Off
If an assessee is entitled to claim depreciation, capital expenditure etc. as well as carried
forward business losses, the sequence of allowing deduction will be as under;
1) Current Depreciation
2) Capital expenditure on scientific research and family planning
3) Carried forward business losses
4) Unabsorbed Depreciation
5) Unabsorbed Capital expenses on scientific research and family planning

Deductions from GTI for a Company

1) Section 80 G ( Deduction in respect of donations to certain funds, charitable
institutions etc)
This will be allowed to all types of assesses.
No Limit Donations (100% deduction)

 National Defence Fund set up by the Central Government

 Prime Minister’s National Relief Fund
 National Foundation for Communal Harmony
 An approved university/educational institution of National eminence
 Zila Saksharta Samiti constituted in any district under the chairmanship of the
Collector of that district
 Fund set up by a state government for medical relief to the poor
 National Illness Assistance Fund
 National Blood Transfusion Council or any State Blood Transfusion Council
  National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental
Retardation, and Multiple Disabilities
 National Sports Fund
 National Cultural Fund
 Fund for Technology Development and Application
 National Children’s Fund
 Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to
any State or Union Territory
 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
 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 the earthquake in Gujarat
 Any trust, institution or fund to which Section 80G(5C) applies for providing
relief to the victims of the earthquake in Gujarat (contribution made between
January 26, 2001, and September 30, 2001)
 Prime Minister’s Armenia Earthquake Relief Fund
 Africa (Public Contributions – India) Fund
 Swachh Bharat Kosh (applicable from FY 2014-15)
 Clean Ganga Fund (applicable from FY 2014-15)
 National Fund for Control of Drug Abuse (applicable from FY 2015-16)
No Limit donations (50% deduction)
 Prime Minister’s Drought Relief Fund
 Jawaharlal Nehru Memorial Fund
 Indira Gandhi Memorial Trust
 Rajiv Gandhi Foundation
Note: Donations to the last three funds will not be eligible for deduction from FY 2023-
24 onwards.

With Limit donations (100% deduction)

  Donations to the government or any approved local authority, institution or
association to be utilised to promote family planning
 Donation by a company to the Indian Olympic Association or any other notified
association or institution established in India to develop infrastructure for sports
and games in India or sponsor sports and games in India.
With limit donations (50% deduction)
 Any other fund or institution satisfies the conditions mentioned in Section
80G(5).
 Government or any local authority, to be utilised for any charitable purpose
other than promoting family planning.
 Any authority constituted in India to deal with and satisfy the need for housing
accommodation or the purpose of planning, development or improvement of
cities, towns, villages or both.
 Any corporation referred to in Section 10(26BB) for promoting the interest of
the minority community.
 For repairs or renovation of any notified temple, mosque, gurudwara, church, or
other places.

2) Sec.80GGA (Deduction in respect of certain donations for scientific

research or rural development)
. In computing the total income of an assessee, cent percent of the amount
paid to the following institutions shall be deducted;
• Scientific research association which has as its objective the undertaking of
scientific, research or to a University, college or other institutions to be used for
scientific, social and statistical research.
• An association or institution, which has as its object the undertaking of any
programme of rural development or to an association or institution which has as
its object the training of persons for implementing programmes of rural
development.
• Sums paid by the assessee in the previous year to a rural development fund set
up and notified by the Central Government for the purpose of Section 35 CCA.
 • A public sector company or a local authority or to an association or institution
approved by the National Committee, for carrying out any eligible project or
scheme or to the undertaking of any programme of conservation of natural
resources or to the National Urban Poverty Eradication Fund set up and notified
by the central Govt.

• Sums paid to the National Urban Poverty Eradication Fund set up and notified by
Central Government.

3) Sec.80GGB (Deduction in respect of contributions made by an Indian

Company to political parties)
The amount contributed is allowed as deduction.

Deductions in respect of certain incomes

4) Sec.80IA (deduction in respect of profits and gains from industrial
undertakings or enterprises engaged in infrastructure development etc)
this is allowed to an assessee in respect of any profits and gains derived
from the business related with the provisions of infrastructural facility,
telecommunication service, industrial park and generation and distribution of
electricity.
The amount allowed as deduction in respect of telecommunication
service is 100% for the first 5 years and 30% for the next 5 years.
In other cases the amount of deduction is 100% of for 10 consecutive assessment years.

5) Sec.80IAB (Deduction in respect of profits and gains by an undertaking or

enterprise engaged in development of special economic zone)
A derives profits and gains from any business of developing special
economic zone, notified after 31-03-2005.
He will get a deduction of 100% of the profits and gains derived
from such business for 10 consecutive assessment years
 6) Sec.80IB (Deduction in respect of profits and gains from industrial
undertakings other than infrastructural development, ships or hotel etc.

This section will be applicable to assesses whose GTI includes any profits and gains
from the business of processing, preservation and packaging of fruits or vegetables or
meat and meat products or poultry or marine or diary products or from the integrated
business of handling storage and transportation of food grains. It should begin to
operate such business on or after 01-04-2001. In case of an undertaking deriving profit
from the business of processing, preservation and packaging of meat or meat products
or poultry or marine or diary products.
The amount of deduction shall be 100% of the profits for 5 AY and thereafter 30%.

7) Sec.80IC (Deduction in respect of profits and gains from undertaking or

enterprise in special category states

This deduction would be available for a new undertaking the special category states:
Sikkim or North Eastern States (Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland and Tripura) – 100% of profit for 10 consecutive AY.
Himachal Pradesh or Uttaranchal – 100% of profit for first 5 years and 30% for next 5
years

8) Sec.80IE (Deduction in respect of profits and gains in respect of certain

undertaking in North Eastern States
The deduction is available in the states of Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim and Tripura,
 To manufacture or produce any eligible article or thing,
 To undertake substantial expansion to manufacture or produce any eligible
article or thing,
 To carry on any eligible business
 Between 1st April 2007 to 1st April 2017,
The deduction will be 100% of the profits and gains for 10 consecutive AY

9) Sec.80JJA (Deduction in respect of profits from the business of processing

of bio-gradable waste)

The deduction is allowable where GTI includes any profits and gains derived from the
business of collecting and processing or treating of bio degradable waste;
1) Generate power, or
2) Producing bio fertilizers, bio pesticides or other biological agents, or
3) For producing bio-gas, or
4) Making pellets for fuel or organic manure.
The whole of the profits and gains of the above activities are deductible for a period of 5
consecutive assessment years relevant to the previous year in which such business
commences.

10) Sec.80JJAA (Deduction in respect of employment of new employees)

Where the GTI of an assessee, being an Indian company, includes
any profits and gains derived from any industrial undertaking engaged in the
manufacture or production of article or thing be allowed a deduction of an amount
equal to 30% of additional wages paid to the new regular workmen employed by the
assessee in the previous year for 3 assessment year including the assessment year
relevant to the previous year in which such employment is provided.

The deduction is allowed to a company, which is not formed by

splitting up, reconstruction or amalgamation.

11) Sec.80LA (Deduction in respect of certain incomes of offshore

banking units)
Where a scheduled bank owns an offshore banking unit in a special
economic zone and derives income, it shall be allowed a deduction of 100% of such
income for 3 consecutive assessment years beginning with the assessment year relevant
to the previous year.
Thereafter 50% of such income for 2 consecutive assessment year
is allowed as deduction.

12) Sec.80M (Deduction in respect of inter corporate dividends)

Deduction under this section would be allowable to a domestic company if GTI
includes any income by way of dividend received from any other domestic company or a
foreign company or a business trust.

 Eligible Companies : Where the Gross Total Income of a Domestic Company in

any
previous year includes any income by way of Dividends from any other Domestic
Company or a foreign company or a business trust.
 Deduction : Amount equal to so much of the amount of income by way of
dividends
received from such other domestic company or a foreign company or a business
trust as does not exceed the amount of dividend distributed by it on or before the
due date, shall be allowed as deduction in computing the total income of the
domestic company.
 No Double Deduction : Where any deduction, in respect of the amount of
Dividend
distributed by the Domestic Company, has been allowed as above u/s 80M(1) in
any previous year, no deduction shall be allowed in respect of such amount in
any other previous year.
 Due date means the date one month prior to the date for furnishing the return of
income w/s 139(1).

Section 80PA (Deduction in respect of certain income of producer companies)

Deduction under this section would be allowable to Farm Producer Companies,
having a total turnover of less than Rs.100 crore in any previous year, whose GTI
includes any profits and gains derived from eligible business, such as,
1) The marketing of agricultural produce grown by its members, or
 2) The purchase of agricultural implements, seeds, livestock or other article
intended for agriculture for the purpose of supplying them to its members, or
3) The processing of the agricultural produce of its members.
100% of profits and gains for the previous year relevant to AY 2019-20 to2024-25