EXEMPTIONS U/S 10 A, 10AA, 10B and 10(23FB)

Presented By: SOWMYA.G.S 2nd M.Com

Special Provisions in Respect of Newly Established Undertakings in Free Trade Zone

Section 10A

Eligible Assessee
Profits & gains derived by a newly established undertaking located in any Free Trade Zone or Electronic Hardware Technology Park or Software Technology Park notified by the Central Government from the export of articles or things or computer software

Conditions to be satisfied
1. It manufactures or produces any article or thing in Free Trade Zone. 2. It should not be formed by the splitting up, or reconstruction of a business already in existence. 3. It is not formed by transfer to a new business of machinery or plant previously used for any purpose. However, if the value of the machinery or plant so transferred does not exceed 20% of the total value of the machinery or plant this condition is not violated.

4. The sale proceeds of articles or things or computer software exported out of India must be received in or bought into India by the assessee in convertible foreign exchange during the PY or within a period of 6months from the end of the relevant PY. 5. The assessee should furnish report from a Chartered Accountant in the prescribed form certifying that the deduction claimed is correct.

6. Return of income should be submitted on or before the due date of filing the returns of income. If the returns is not submitted or submitted belatedly, deduction under this Sec is not available. 7. The expression Manufacture or Produce shall include the cutting & polishing of precious & semi-precious stones.

Amount of Deduction
Export Turnover of the undertaking
Total turnover of the Undertaking

Profits of the business of the undertaking

Meaning
Export Turnover
Export turnover means the consideration in respect of export by the undertaking of articles or things or computer software received in (brought into) India by the assessee in convertible foreign exchange within the prescribed period but does not include the followingFreight; Telecommunication charges; Insurance attributable to the delivery of the articles or things or computer software outside India; Expenses, if any, incurred in foreign exchange in providing the technical services outside India.

Period of Deduction
The deduction will be available for a period of 10 consecutive AYs beginning with the AY relevant to the PY in which the undertaking begins to manufacture or produce such articles or things or computer software. This deduction is not available to any undertaking from the AY 2011-12

Special Provisions in respect of Newly Established Undertakings in Special Economic Zone

Section 10AA

Eligible Assessee

An entrepreneur who has begun or begins to manufacture or produce articles or things or provides services in SEZ as defined under SEZ Act, 2005 are eligible for exemption

Meaning
Entrepreneur According to Sec 2(j) of SEZ Act, 2005 Entrepreneur is a person who has been granted a letter of approval by the Development Commissioner to set a unit in a SEZ

Conditions to be satisfied
1. It has begun or begins to manufacture or produce articles or provide services in any SEZ on or after 01.04.2006 2. It is not formed by splitting up, or the reconstruction of a business already in existence. 3. It is not formed by the transfer to a new business, of machinery or plant previously used for any purpose. However, the value of the machinery or plant so transferred shall not exceed 20% of the total value of machinery or plant

4. The assessee has income from export of articles or thing or from services from such unit. 5. Books of accounts of the tax payer should be audited. The tax payer should submit the audit report in Form No.56F along with the return of income.

Meaning
Export Turnover
Export turnover means the consideration in respect of export by the undertaking of articles or things or services received in, or brought into India by the assessee, but does not include the following: Freight; Telecommunication charges: Insurance attributable to the delivery of the articles or things or computer software outside India; Expenses, if any, incurred in foreign exchange in providing the technical services (including computer software) outside India.

Amount of Deduction
Export Turnover of the undertaking

Total turnover of the Undertaking

Profits of the business of the undertaking

Deduction depends upon quantum of profit derived from export of articles or things or services.

Amount of Deduction
Deduction
First 5 consecutive AYs Next 5 consecutive AYs Next 5 consecutive AYs 100% of the profits 50% of the profits
Any amt transferred to Special Economic Zone Re-investment Reserve Account OR 50% of the profits Whichever is lower

Conditions for utilising the SEZ Reinvestment Reserve Account

1. The Special Reserve Account should be utilised for the purpose of acquiring new plant & machinery. 2. The new plant & machinery should be first put to use before the expiry of 3 years from the end of the year in which the Special Reserve Account was created. 3. Until the acquisition of new plant & machinery the Special Reserve Account can be utilised for distribution of dividends/profits or for remittance outside India as profit or for creating an asset outside India.

4. Prescribed particulars should be submitted in respect of new plant & machinery along with the return of income for the PY in which such plant & machinery was first put to use. 5. If the Special Reserve Account is misutilised, then the deduction would be taken back in the year in which the Special Reserve Account is misutilised. If the Special Reserve Account is not utilised for acquiring new plant & machinery within 3 years , then the deduction would be taken back in the year immediately following the period of 3 years.

Special Provisions in respect of Newly Established 100% Export Oriented Undertakings

Section 10B

Eligible Assessee
Profits & gains derived by a newly established undertaking recognized as 100% EOU (Export Oriented Undertaking) under the Industries(Development & Regulation)Act, 1951 from the export of articles or things or computer software

Conditions To Be Satisfied
1. It must produce or manufacture articles or things or computer software. 2. It should not be formed by splitting up or the reconstruction of a business already in existence. 3. It should not be formed by transfer to a new business of plant or machinery previously used for any purpose. However, if the value of the machinery or plant so transferred does not exceed 20% of the total value of the plant or machinery, this condition is not violated.

4. There must be repatriation of sale proceeds into India. 5. The assessee should furnish audit report in Form No.56F along with the return of income. The audit report must certify that the deduction has been correctly claimed in accordance with the provisions of the section. 6. Return of income should be submitted on or before the due date of submission of return of income. If return is not submitted or submitted belatedly, deduction under this section is not available.

Amount of Deduction

Export Turnover Profits of the business of the undertaking

Total turnover of the business carried on by the assessee

Period of Deduction
The assessee can claim deduction under this section from his total income for a period of 10 consecutive AYs beginning with the AY relevant to the PY in which the undertaking begins to manufacture or produce such articles or things or computer software. No deduction under this section shall be allowed to any undertaking from the AY 2011-12

Income of Venture Capital Fund or Venture Capital Company

Section 10(23FB)

This section has been inserted with effect from the AY 2001-02

Conditions to be Satisfied
1. There is a venture capital company or venture capital fund. 2. The venture capital company or venture capital fund has been set up to raise funds for investments in a venture capital undertaking.

Meanings
Venture capital company means: a company which has been granted a certificate of registration under the SEBI Act, and regulations made thereunder; a company which fulfils the conditions as may be specified by the SEBI by notification in the official gazette.

Venture capital fund means: a fund which operates under a trust deed registered under the provisions of the Registration Act or operates as a venture capital scheme made by UTI; a fund which has been granted a certificate of registration under SEBI Act, and regulations made thereunder; a fund which fulfils the conditions as may be specified by SEBI by notification in the official gazette.

From AY 2008-09 Venture capital undertaking means such domestic company whose shares are not listed in a recognized stock exchange in India and which is engaged in the business of naon technology, information technology relating to hardware & software development, bio-technology, production of bio-fuels, research & development of new chemical entities in the pharmaceutical sector etc.

If the above 2 conditions are satisfied, then any income of such venture capital fund or venture capital company is exempt from tax u/s 10(23FB). The income of the venture capital company or venture capital fund shall continue to be exempt if, the shares of the venture capital undertaking in which the venture capital company or venture capital fund has made the initial investment, are subsequently listed in a recognized stock exchange in India.

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