Section 40(a)(iib) - Certain fee etc. paid to a State Govt. Undertaking to the State Govt. - Income Tax - Ready Reckoner - Income Tax

Section 40(a)(iib) : Certain fee etc. paid to a State Govt. Undertaking to the State Govt. Any amount paid by way of royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called, which is levied exclusively on or which is appropriated, directly or indirectly from a State Government undertaking by the State Government, is not allowed as deduction It may be noted that disallowance will be attracted if Levy is by State Government. No disallowance shall be attracted if levy is by Central Government. What is State Government Undertaking? For the above purpose, a State Government Undertaking includes the following: a corporation established by or under any Act of the State Government; a company in which more than fifty per cent of the paid-up equity share capital is held by the State Government; a company in which more than fifty per cent of the paid-up equity share capital is held by the entity referred to in clause (i) or clause (ii) (whether singly or taken together); a company or corporation in which the State Government has the right to appoint the majority of the directors or to control the management or policy decisions, directly or indirectly, including by virtue of its shareholding or management rights or shareholders agreements or voting agreements or in any other manner; an authority, a board or an institution or a body established or constituted by or under any Act of the State Government or owned or controlled by the State Government.