DEDUCTION UNDER SECTION 80-IAC FOR STARTUPS :: AN OPPORTUNITY

DEDUCTION UNDER SECTION 80IAC FOR STARTUPS

Sl. No. CRITERIA CONDITIONS
1 Eligible Business “a business which involves innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.
2 Eligible Start-up 1.       is a company or a Limited Liability Partnership (LLLP)

2.       is engaged in Eligible Business (as above).

3.       is incorporated between 1 April 2016 to 31 March 2019 (both dates inclusive)

4.       total turnover of its business does not exceeds Rs. 25 crore in any of the following five financial years ie., FY 2016-17 To FY 2020-21

5.       certified by the Inter-Ministerial Board of Certification in respect of Eligible Business

3 Amount of Deduction 100% of profits and gains derived from eligible business
4 Period of Deduction 3 consecutive assessment years
5 Commencement of Deductions At the option of the Assessee, any 3 consecutive Assessment years out of 5 years beginning from the year in which the eligible start-up is incorporated.
6 Restrictions 1.       Should  not  be  formed  by SPLITTING  UP or  the RECONSTRUCTION  of  a  business  already  in existence; or

2.       Not formed by TRANSFER of Plant & Machinery used for any purpose.

However, if any ‘second-hand’ Plant & Machinery,

a.       used outside India by any person other than the assessee, is

b.      imported into India, and

c.      no depreciation on the said Plant & Machinery has been allowed under the Income-tax act, 1961.

shall not be regarded as Transfer of used Plant & Machinery.

Further, where, the total value of the Plant & Machinery, transferred does not exceed 20% of the Total  Value  of  Plant  &  Machinery  used  in  the  Business,  the  above  condition  is  deemed  to  be complied with.

7 Separate Books of Accounts and Audit
  •   Separate Accounts are required for Eligible Business.
  •   Accounts are required to be Audited by a Chartered Accountant.
  •   To furnish Audit Report  in Form No. 10CCB, along with Return of Income
8 Related Party Transactions POWER OF ASSESSING OFFICER TO RECOMPUTE PROFITS:

  •   Transfer  of  any  goods  or  services  held  for  the  purpose  of  any  other  business  to  the  eligible business other than Fair Market Value (FMV).
  •   Owing to close connection between the assessee & any other person, the course of business is so arranged that the business between them produces more than ‘ordinary profits.’
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