Tax Holiday provisions in respect of newly established hundred percent export

oriented undertakings ( Section 10B)

A tax holiday of export profits and gains of a hundred percent export oriented
undertaking will be allowed beginning with the assessment year relevant to the previous
year in which the undertaking begins to manufacture or produce articles or things. The
benefit of tax holiday will be 90% of the export profit with effect from assessment year
2003-2004.

However no deduction under this section shall be allowed with effect from assessment
year 2010-2011 which means a newly set up undertaking which begins its production in
the financial year 2002-2003 will be allowed the benefit of this section only for a period
of 7 years.

This section applies to any undertaking which fulfils all the following conditions
namely:-

i) it manufactures or produces any articles or things or computer software;

ii) it is not formed by the splitting up, or the reconstruction, of a business already
in existence.
iii) It is not formed by transfer to a new business of machinery or plant previously
used for any purpose exceeding a value of more than 20% of the total value of
machinery or plant used in the new business.

However any plant and machinery imported into India 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.

The sale proceeds of the export must be received in, or brought into, India by the assessee
in convertible foreign exchange, within a period of six months from the end of previous
year or, within such further period as the RBI may allow in this regard.

Where during any previous year, the ownership or beneficial interest in the undertaking is
transferred by any means; the tax holiday shall stand withdrawn from that financial year.

For the purposes of this section “hundred percent export oriented undertakings” means an
undertaking which has been approved as a hundred percent exported oriented undertaking
by the Board appointed in this behalf by the Central Government in exercise of the
powers conferred by section 14 of the Industries ( Development and Regulation) Act,
1951 and the rules made under that Act.