Phasing out of incentives under the Income-tax Act, 1961 :
Effective from : A.Y. 2017-18
(i) The Finance Minister in his Budget Speech, 2015 has indicated that the rate of corporate tax will be reduced from 30% to 25% over the next four years along with corresponding phasing out of exemptions and deductions. The Government proposed to implement this decision in a phased manner.
(ii) Accordingly, the following incentives under the Act are to be phased out in the manner given hereunder:
| Section | Incentive under the
Income-tax Act, 1961 |
Amendment by the Finance Act, 2016restricting/phasing out the incentive | ||||||||||||
| 35 |
Expenditure on/Contribution for scientific research |
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| 35(1)(ii) | 175% of sum paid to:
(i) an approved scientific research association which has the object of undertaking scientific research.
(ii) an approved university,college or other institution, if such sum is used for scientific research. |
Weighted deduction to be restricted to –
|
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| 35(1)(iia) | 125% of any sum paid as contribution to an Indian company for approved scientific research | Deduction to be restricted to 100% from P.Y.2017-18 (i.e., A.Y.2018-19) | ||||||||||||
| 35(1)(iii) | 125% of any sum paid as contribution to an approved research association or university
or college or other institution to be used for research in social science or statistical research |
Deduction to be restricted to 100% from P.Y.2017-18 (i.e., A.Y.2018-19) | ||||||||||||
| 35(2AB) | 200% of any sum paid to a National Laboratory or a University or an IIT or a specified person for the purpose of approved scientific research programme. |
|
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| 35(2AB) | 200% of the expenditure (not being expenditure in
the nature of cost of any land or building) on scientific research on approved in-house research and development facility incurred by a company, engaged in the business of bio-technology or in the business of manufacture or production of any article or thing with the exceptions of items specified in the Eleventh Schedule. |
Weighted deduction to be restricted to –
|
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|
35AC |
Expenditure on eligible projects or schemes |
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| Deduction for expenditure incurred by way of payment of any sum to a public sector company or a local authority or to an approved association or institution, etc. on certain eligible social development project or a scheme. | No deduction under this section shall be available from P.Y.2017-18 (i.e., from A.Y.2018-19) | |||||||||||||
| 35AD |
Deduction in respect of specified business |
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| In case of specified business of setting up and operating a cold chain facility or warehousing facility for storage \ of agricultural produce or building and operating a hospital with atleast 100 beds for patients or developing and building an affordable housing project or production of fertiliser in India, weighted deduction@150% of capital expenditure (other than expenditure on land, goodwill and financial assets) is allowed, if the operations are commenced on or after 1.4.2012. | The deduction shall be restricted to 100% of capital expenditure from P.Y.2017-18 onwards (i.e., from A.Y.2018-19 onwards). This is effected by omission of sub-section (1A) providing for such weighted deduction. | |||||||||||||
| 35CCC | Expenditure on notified agricultural extension project | |||||||||||||
| Weighted deduction of 150% of expenditure incurred on notified agricultural extension project is allowed. | Deduction to be restricted to 100% from
P.Y.2020-21 onwards (i.e., from A.Y.2021- 22 onwards). |
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| 35CCD | Expenditure on skill development project | |||||||||||||
| Weighted deduction of 150% of any expenditure incurred (not being expenditure in the nature of cost of any land or building) by a company on any notified skill development project is allowed. | Deduction shall be restricted to 100% from P.Y.2020-21 onwards (i.e., from A.Y.2021- 22 onwards). | |||||||||||||