Phasing out of profit-linked incentives [Sections 80-IA, 80-IAB, 80-IB]
Related amendment in section: 35AD
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 few years along with corresponding phasing out of exemptions and deductions. The Government proposes 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 here under:
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Section
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Incentive under the Income-tax
Act, 1961 |
Amendment by the Finance Act, 2016 restricting/phasing out the incentive |
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80-IA(4) |
Deduction of 100% of profits derived by an enterprise carrying on the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility which fulfils the conditions stated thereunder. Deduction would be allowed for any ten consecutive assessment years out of fifteen years beginning from the year in which the enterprise develops and begins to operate any infrastructure facility. | Any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after 1.4.2017 will not be allowed deduction under section 80-IA. Instead, they would be eligible for investment-linked tax deduction under section 35AD. |
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80-IAB |
Deduction of 100% of profits derived by an undertaking or enterprise from any business of developing a SEZ which fulfils the conditions stated thereunder. Deduction would be allowed for any ten consecutive assessment years out of fifteen years beginning from the year in which the SEZ has been notified by the Central Government. | No deduction would be available to an assessee, being a developer, where the development of SEZ begins on or after 1st April, 2017. |
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80-IB(9) |
Deduction of 100% of profits for a period of seven consecutive assessment years, if the undertaking fulfils the following conditions –
(i) it is located in any part of India and has begun or begins commercial production of mineral oil on or after 1.4.1997; (ii) it is engaged in commercial production of natural gas in licensed blocks [NELP-VIII] and begins commercial production of natural gas on or after 1.4.2009;
(iii) it is engaged in commercial production of natural gas in licensed blocks [IV Round of bidding] and begins commercial production of natural gas on or after 1.4.2009. |
No deduction would be available to an assessee, being a developer, where the development of SEZ begins on or after 1st April, 2017.
Sunset clause has been inserted and commercial production of mineral oil and natural gas in licensed blocks should have commenced on or before 31.3.2017, for availing benefit of deduction under section 80-IB. No deduction would be available under section 80-IB where the commercial production of mineral oil and natural gas commences on or after1.4.2017. |