Deductions under section 80G, 80GGB, 80IA, 80IB

Section 80GG: House Rent Paid

Deduction for House Rent Paid Where HRA is not Received

1. Section 80GG deduction is available for rent paid when HRA is not received. The taxpayer, spouse or minor child should not own residential accommodation at the place of employment
2. The taxpayer should not have self-occupied residential property in any other place
3. The taxpayer must be living on rent and paying rent
4. The deduction is available to all individuals

Section 80GGB: Company Contribution

Deduction on contributions given by companies to Political Parties

Section 80GGB deduction can an Indian company for the amount contributed by it to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash.  

the deductions U/s 80IA which is coming to end for certain categories of enterprises in respect of certain incomes.

(a) Developing Roads etc.:  The eligible enterprise should commence business between 01.04.1995 and 31.03.2017.  100% of profit for any 10 consecutive assessment years in a block of 20 years commencing from the previous year in which the enterprise starts business. Accordingly, for those enterprises who commenced business & started claiming deduction between 01.04.1995 and 01.04.2009, the deduction came to end for them w.e.f. A.Y. 2020-21.

(b) Developing Ports etc.: The eligible enterprise should commence business between 01.04.1995 and 31.03.2017.  100% of profit for any 10 consecutive assessment years in a block of 15 years starting from the previous year in which the enterprise starts business. Accordingly, for those enterprises who commenced business & started claiming between 01.04.1995 and 01.04.2009, the deduction came to end for them w.e.f. A.Y. 2020-21.

(c) Telecommunication Services: The eligible enterprise should commence business between 01.04.1995 and 31.03.2005.  100% of profit for first 5 assessment years and 30% for next five assessment years for any 10 consecutive years in a block of 15 years commencing from the previous year in which the enterprise starts business. Accordingly, for those enterprises who commenced business & started claiming deduction between 01.04.1995 and 01.04.2009, the deduction came to end for them w.e.f. A.Y. 2020-21.  Further, A.Y. 2020-21 is the last year of the block of 15 years after which the deduction will never be available.

(d) Industrial Parks: The industrial park should be notified by the Central Govt. in accordance with the scheme framed between 01.04.1997 and 31.03.2011. 100% of profit for any 10 consecutive assessment years in a block of 15 years starting from the previous year in which the enterprise starts business. Accordingly, for those enterprises who commenced business & started claiming deduction between 01.04.1997 and 01.04.2009, the deduction came to end for them w.e.f. A.Y. 2020-21.

(e) Special Economic Zones: The SEZs should be notified by the Central Govt. in accordance with the scheme framed between 01.04.1997 and 31.03.2005. 100% of profit for any 10 consecutive assessment years in a block of 15 years starting from the previous year in which the enterprise starts business. Accordingly, for those enterprises who commenced business & started claiming deduction between 01.04.1997 and 01.04.2009, the deduction came to end for them w.e.f. A.Y. 2020-21. Further, A.Y. 2020-21 is the last year of the block of 15 years after which the deduction will never be available.

(f) Generation or generation and distribution of Power: The business should commence between 01.04.1993 and 31.03.2017. 100% of profit for any 10 consecutive assessment years in a block of 15 years starting from the previous year in which the enterprise starts business. Accordingly, for those enterprises who commenced business & started claiming deduction between 01.04.1993 and 01.04.2009, the deduction came to end for them w.e.f. A.Y. 2020-21.

(g) Laying a Network: The business should commence between 01.04.1999 and 31.03.2017. 100% of profit for any 10 consecutive assessment years in a block of 15 years starting from the previous year in which the enterprise starts business. Accordingly, for those enterprises who commenced business & started claiming deduction between 01.04.1999 and 01.04.2009, the deduction came to end for them w.e.f. A.Y. 2020-21.

(h) Substantial Renovation and Modernisation: The business should commence between 01.04.2004 and 31.03.2017. 100% of profit for any 10 consecutive assessment years in a block of 15 years starting from the previous year in which the enterprise starts business. Accordingly, for those enterprises who commenced business & started claiming deduction between 01.04.2004 and 01.04.2009, the deduction came to end for them w.e.f. A.Y. 2020-21.

(i) Reconstruction or revival of a power generating plant: The company must be notified before 31.12.2005 by the Central Government. Such undertaking begins to generate or transmit or distribute power before 31.03.2011.  100% of profit for any 10 consecutive assessment years in a block of 15 years starting from the previous year in which the company starts business.  Accordingly, for those companies who commenced business & started claiming deduction between 01.04.2006 and 01.04.2009, the deduction came to end for them w.e.f. A.Y. 2020-21.

Sec – 80-Ib: Deduction In Respect Of Profit And Gains From Industrial Undertakings Other Than Infrastructure Development Undertakings

1. The deduction in case of an assessee whose gross total income includes any profits and gains from any business of an industrial undertaking, shall be of the following amount:

i. In case of an industrial undertaking located in an industrial Backward State:

1. For the initial 5 assessment years: 100% of the profit and gains derived from such undertaking and
2. Thereafter, for the next 5 assessment years: 25% of the profits and gains derived from such industrial undertaking. (30% in case of a company) (25% for 7 assessment years in case of co-operative society)

ii. In case of an industrial undertaking located in an industrial Backward district:

1. For the initial 5 assessment years: 100% of the profit and gains derived from such undertaking and
2. Thereafter, for the next 5 assessment years: 25% of the profits and gains derived from such industrial undertaking. (30% in case of a company) (25% for 7 assessment years in case of co-operative society)

Note: The deduction is available to an Industrial Undertaking, which fulfills all the following conditions:

1. It is not formed by splitting up, or the reconstruction of a business in existence.

Exception: If re-construction takes place in the circumstances and period given in section 33B, then deduction is available.

1. It is not formed by the transfer to a new business of machinery or plant previously used for any purpose. [Note: The deduction under section 80IB shall be available if the new undertaking is started in an old building or if old furniture and fittings are used]

Exception:

1. Imported old Plant & Machinery
2. 20% of total Plant & Machinery can be old.
3. It begins to manufacture or produce articles or things at any time up to 31-03-2004. For Jammu & Kashmir sunset date is 31-03-2012.
4. The undertaking employs ten or more workers in a manufacturing process carried on with the aid of power or employs twenty or more workers in a manufacturing process carried on without the aid of power.
5. The deduction is available to any undertaking which begins commercial production or refining of mineral oil in any part of India. The deduction is 100% of the profits from such business for the 7 consecutive assessment years including the initial assessment year. Initial assessment year means the assessment year relevant to the previous year in which the undertaking commences the commercial production or refining of mineral oil.
6. The deduction under section 80-IB shall be:

• 100% of the profits for a period of 7 consecutive Assessment Years
• Derived from an undertaking which is engaged in commercial production of natural gas in blocks licensed under the New Exploration Licensing Policy (NELP)
• And which begins commercial production of natural gas
• The deduction shall commence from the AY relevant to the previous year in which the undertaking commences commercial production of natural gas.

Explanation: For the purpose of claiming deduction under this section, all blocks licensed under a single contract, which has been awarded under the NELP, shall be treated as a single undertaking. (This explanation is relevant for both mineral oil and natural gas)

Business	Sunset Date
Refining of Mineral Oil	Refining to start by 31st March, 2012 9 (but not later than 31.03.2017)
Production of Mineral Oil	No deduction in respect of blocks licensed after 31.03.2011 (but not later than 31.03.2017)
Production of Natural Gas	Commercial production to start by 01.04.2009 (but not later than 31.03.2017)

3. The amount of deduction in the  case of an undertaking developing and building housing projects approved by a local authority shall be 100% of the profits derived in any previous year from such housing project if:

• such undertaking commences development and construction of the housing project and completes such construction within 5 years, from the end of the financial year in which the housing project is approved by the local authority.

• the project is on the size of a plot of land which has a minimum area of an acre

• the residential unit has a maximum built-up area of 1000 square feet where such residential unit is situated within the city of Delhi or Mumbai or within 25 kilometers from the municipal limits of these cities and 1500 square feet at any other place and

• the built up area of the shops and other commercial establishments included in the housing project does not exceed 3% of the aggregate built-up area of the housing project or five thousand square feet, whichever is higher.

• Not more than one residential unit in the housing project is allotted to any person not being an individual and

• in a case  where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely:

i. The individual or the spouse or the minor children of such individual

ii. The HUF in which such individual is the Karta

iii. The person representing such Individual, the spouse or the minor children of such individual or the HUF in which such individual is the Karta.

The deduction is 100% of the profits derived from the housing project in any previous year. It is possible that the residential units are sold say over a period of 6 years, then the deduction shall be profits derived during these 6 years from the housing project.

Note: Deduction can be claimed on a year to year basis where assessee is showing profit from partial completion of project. If later any of the condition is violated, then deduction allowed in earlier years shall be withdrawn.

4. The amount of deduction in the case of an undertaking deriving profits from the business of operating and maintaining a hospital located anywhere in India, other than the excluded area, shall be 100% of the profits and gains derived from such business for a period of 5 consecutive assessment years, beginning with  the initial assessment year, if:
5. The hospital has at least 100 beds for patients
6. The construction of the hospital is in accordance with the regulations or bye-laws of the local authority.

80IC

Tax subsidy for enterprises in Himachal Pradesh, Sikkim, Uttaranchal and North – Eastern states

For the purpose to set up more industries for overall development of some less developed states in India, this section came into the picture. The major objective of providing tax holiday to specified states is to promote and encourage industrial development in those states.

Deduction under this section is available to undertakings established in specified states. Under this section, eligible assessee will get tax deduction on profits under business head for specified period of time.In this blog, we will discuss the list of states covered who are eligible to claim deduction, conditions and amount of deduction etc. This section was inserted from the assessment year 2004-05.

States covered under section 80-IC

S.No.	Name of state
1.	Sikkim
2.	Himachal Pradesh
3.	Uttranchal
4.	North Estern States ( Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura )