Demystifying THE THIRTEENTH SCHEDULE sections 80-IB(4) and 80-IC(2 of Income Tax Act 1961

Introduction

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Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning.

As a taxpayer, you want to optimize your tax liability and minimize your tax burden. To achieve this, you need to be aware of the various tax-saving provisions available under the Income Tax Act 1961. One such provision is THE THIRTEENTH SCHEDULE sections 80-IB(4) and 80-IC(2), which offer tax incentives to eligible businesses. In this blog, we will delve deeper into these provisions, their eligibility criteria, benefits, and FAQs.

Eligibility Criteria for THE THIRTEENTH SCHEDULE sections 80-IB(4) and 80-IC(2)

To avail of the benefits of THE THIRTEENTH SCHEDULE sections 80-IB(4) and 80-IC(2), a business must meet certain eligibility criteria. These include:

Eligibility criteria for section 80-IB(4)

• The business must be engaged in manufacturing, production, or processing of goods.
• The business must have commenced production or manufacture of goods on or after April 1, 2007.
• The business must not have claimed deduction under any other section of Chapter VI-A of the Income Tax Act 1961.

Eligibility criteria for section 80-IC(2)

• The business must be engaged in manufacturing or production of goods, computer software, or hotel services.
• The business must have commenced operations on or after April 1, 2007, but before March 31, 2012.
• The business must not have claimed deduction under any other section of Chapter VI-A of the Income Tax Act 1961.

Benefits of THE THIRTEENTH SCHEDULE sections 80-IB(4) and 80-IC(2)

Now that we know the eligibility criteria for these provisions, let’s look at the benefits they offer to eligible businesses.

Benefits of section 80-IB(4)

• The business is eligible for a deduction of 100% of profits and gains derived from the eligible business for the first five assessment years.
• The business is eligible for a deduction of 25% of profits and gains derived from the eligible business for the next five assessment years.
• The deduction is available only if the profits and gains are derived from the eligible business.

Benefits of section 80-IC(2)

• The business is eligible for a deduction of 100% of profits and gains derived from the eligible business for the first five assessment years.
• The business is eligible for a deduction of 50% of profits and gains derived from the eligible business for the next five assessment years.
• The deduction is available only if the profits and gains are derived from the eligible business.

FAQs about THE THIRTEENTH SCHEDULE sections 80-IB(4) and 80-IC(2)

Q1. Can a business claim deduction under both sections 80-IB(4) and 80-IC(2)?

A1. No, a business can claim deduction under either section 80-IB(4) or section 80-IC(2), but not both.

Q2. What is the maximum deduction that a business can claim under these sections?

A2. The maximum deduction that

a business can claim under section 80-IB(4) is 100% of profits and gains for the first five assessment years and 25% of profits and gains for the next five assessment years. The maximum deduction that a business can claim under section 80-IC(2) is 100% of profits and gains for the first five assessment years and 50% of profits and gains for the next five assessment years.

Q3. Is there a limit on the amount of deduction that a business can claim under these sections?

A3. Yes, the total deduction that a business can claim under these sections cannot exceed the total amount of profits and gains derived from the eligible business.

Q4. Can a business claim deduction under section 80-IB(4) or section 80-IC(2) if it has claimed deduction under any other section of Chapter VI-A of the Income Tax Act 1961?

A4. No, a business cannot claim deduction under section 80-IB(4) or section 80-IC(2) if it has claimed deduction under any other section of Chapter VI-A of the Income Tax Act 1961.

Q5. Can a business claim deduction under these sections if it has incurred losses in the previous year?

A5. Yes, a business can claim deduction under these sections even if it has incurred losses in the previous year, subject to the conditions specified in the sections.

Conclusion

In conclusion, THE THIRTEENTH SCHEDULE sections 80-IB(4) and 80-IC(2) of the Income Tax Act 1961 offer attractive tax incentives to eligible businesses engaged in manufacturing, production, or processing of goods, computer software, or hotel services. To avail of these benefits, a business must meet the specified eligibility criteria and comply with the conditions specified in the sections. It is advisable to consult a tax expert or chartered accountant to ensure compliance with the provisions of the Income Tax Act 1961 and optimize tax savings.