Applicable Deductions u/s 80IA, 80IB, 80IC, 80G
17/02/2024The Income Tax Act, 1961, provides various deductions under Section 80 for individuals and companies, aimed at encouraging investments in specific sectors, promoting charitable activities, and fostering economic growth in certain regions. Sections 80IA, 80IB, 80IC, and 80G outline deductions related to infrastructure development, industrial activities, special state incentives, and donations, respectively.
Section 80IA: Deductions in Respect of Profits and Gains from Industrial Undertakings or Enterprises Engaged in Infrastructure Development
- Eligibility:
This deduction is available to enterprises involved in infrastructure development, such as developing or operating and maintaining any infrastructure facility, developing special economic zones (SEZs), or generating, transmitting, or distributing power.
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Deduction Amount:
Enterprises can claim a deduction of 100% of the profits and gains for ten consecutive assessment years out of 15 years (20 years in certain cases) from the year of commencement.
- Conditions:
The undertaking must not be formed by splitting up, or the reconstruction of an existing business, except in certain prescribed circumstances. It should also fulfill conditions regarding its commencement of operations within specified timelines.
Section 80IB: Deductions in Respect of Profits and Gains from Certain Industrial Undertakings Other than Infrastructure Development Undertakings
- Eligibility:
This deduction is targeted at various industrial undertakings not covered under Section 80IA, including businesses involved in the processing, preservation, and packaging of fruits or vegetables, meat, meat products, or poultry, among others.
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Deduction Amount:
The deduction varies from 100% to 30% of the profits and is available for different periods ranging from 5 to 10 years, depending on the type of activity and its location.
- Conditions:
The undertaking must fulfill specific conditions related to its size, location, and the nature of the activity. The commencement of operations must be within certain time frames, and the enterprise should not be formed by splitting up or reconstruction of a business.
Section 80IC: Special Provisions in Respect of Certain Undertakings or Enterprises in Certain Special States
- Eligibility:
This deduction is available for any enterprise or undertaking in specified special states, including Himachal Pradesh, Uttarakhand, and the North Eastern States, engaged in the manufacture or production of certain items or in specified sectors.
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Deduction Amount:
100% of profits and gains for the first five years and 25% (30% for companies) for the next five years.
- Conditions:
Similar to Sections 80IA and 80IB, the enterprise must not be formed by splitting up or the reconstruction of a business. It must start its operations within the specified time frame.
Section 80G: Deductions in Respect of Donations to Certain Funds, Charitable Institutions, etc.
- Eligibility:
This deduction is available to all assessees who make donations to prescribed funds and charitable institutions. It encompasses a wide range of recipients, from relief funds established by the government to certain approved educational institutions and charitable organizations.
- Deduction Amount:
The deduction can be either 100% or 50% of the amount donated, with or without a restriction on the qualifying limit, depending on the recipient organization.
- Conditions:
Donations must be made in modes other than cash (for donations exceeding ₹2000) to qualify for the deduction. The donation should be made to an approved institution or fund.