Deduction in respect of specified Business - Section 80IAC - Income Tax - Ready Reckoner - Income Tax

Section 80IAC - Deduction in respect of specified Business To initiate the development of startups in India and provide a competitive platform, Section 80-IAC states that an eligible startup shall be allowed a deduction of an amount equal to 100% of the profits and gains. With the intention to promote job-creators, this Section was introduced in the Finance Act of 2016 and was later amended in the Finance Bill of 2018 . Eligible Business :- For the A.Y. 2017-18 - A business carried out by an eligible start up engaged in innovation, development or improvement of products or processes or services driven by technology or intellectual property. For A.Y. 2018-19 - A business carried out by an eligible start up engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment generation or wealth creation. Quantum of deduction :- Where the gross total income of an assessee, being an eligible start-up, a deduction of an amount equal to 100%. of the profits and gains derived from such business for 3 consecutive assessment years out of 10 consecutive assessment years at the option of assessee beginning from the year in which the eligible start-up is incorporated will be allowed. Eligible startup :- means a company or a limited liability partnership engaged in eligible business which fulfils the following conditions, namely:- It is incorporated on or after 1.4.2016 but before 1.4.2024 [Amended by FA, 2023 ] Total turnover of its business( company or LLP) does not exceed Rs. 25 crore in PY relevant to AY (Rs. 100 crore from the A.Y. 2021-22) in which deduction u/s 80-IAC is claimed. It holds a eligible certificate of business from Inter-Ministerial Board of Certification as notified in the Official Gazette by the CG. it is not formed by splitting up, or the reconstruction , of a business already in existence. Exception:- this condition shall not apply in respect of a start-up which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as referred to in section 33B , in the circumstances and within the period specified in that section. it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Some points relevant to Plant and machinery Any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if all the following conditions are fulfilled, namely :- such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India; such machinery or plant is imported into India; no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee. Previously used machinery or plant for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed 20% of the total value of the machinery or plant used in the business, shall be deemed to have been complied with the condition specified for used P M . Audit of Books of Accounts The deduction shall be allowed only if a chartered accountant has audited the accounts of the startup for the relevant previous year and the assessee furnishes the audit report in the form that is prescribed, and duly signed and verified by such an accountant along with his return of income. Upto A.Y. 2019-20 - on or before the due date of submission of return of income. From the A.Y. 2020-21 - one month prior to the due date of submission of return of income (if the due date of submission of return of income is October 31 of the A.Y., the audit report should be uploaded or or before September 30th of A.y.).