Exemptions 10A, 10AA, 10B

7/31/2019 Exemptions 10A, 10AA, 10B

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EXEMPTIONS U/S

10 A, 10AA, 10Band 10(23FB)

Presented By:

SOWMYA.G.S

2ndM.Com


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Special Provisions in Respect

of Newly Established

Undertakings in Free Trade

Zone

Section 10A


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Eligible Assessee

Profits & gains derived by a newly established

undertaking located in any Free Trade Zone orElectronic Hardware Technology Park or

Software Technology Park notified by the

Central Government from the export of articles orthings or computer software


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Conditions to be satisfied

1. It manufactures or produces any article or thingin 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 machineryor plant so transferred does not exceed 20% of

the total value of the machinery or plant this

condition is not violated.


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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 assesseein 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.


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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 orsubmitted belatedly, deduction under this Sec is

not available.

7. The expression Manufacture or Produce shallinclude the cutting & polishing of precious &

semi-precious stones.


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Amount of Deduction

Export Turnover of

the undertaking Profits of thebusiness of

Total turnover of the

the Undertaking undertaking


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Meaning

Export TurnoverExport turnover means the consideration in respect of exportby the undertaking of articles or things or computer softwarereceived in (brought into) India by the assessee in convertible

foreign exchange within the prescribed period but does notinclude the following-

Freight;

Telecommunication charges;

Insurance attributable to the delivery of the articles or thingsor computer software outside India;

Expenses, if any, incurred in foreign exchange in providingthe technical services outside India.


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Period of Deduction

The deduction will be available for a period of10

consecutive AYsbeginning 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


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Special Provisions in respect

of Newly EstablishedUndertakings in Special

Economic Zone

Section 10AA


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Eligible Assessee

An entrepreneur who has begun or begins tomanufacture or produce articles or things or

provides services in SEZ as defined under SEZ

Act, 2005 are eligible for exemption


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Meaning

Entrepreneur

According to Sec 2(j) of SEZ Act, 2005Entrepreneur is a person who has been granted a

letter of approval by the Development

Commissioner to set a unit in a SEZ


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Conditions to be satisfied

1. It has begun or begins to manufacture or producearticles or provide services in any SEZ on or

after 01.04.2006

2. It is not formed by splitting up, or thereconstruction 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 anypurpose. However, the value of the machinery or

plant so transferred shall not exceed 20% of the

total value of machinery or plant


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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 auditreport in Form No.56F along with the return of

income.


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Meaning

Export TurnoverExport turnover means the consideration in respect ofexport by the undertaking of articles or things or servicesreceived 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 orthings or computer software outside India;

Expenses, if any, incurred in foreign exchange inproviding the technical services (including computer

software) outside India.


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Amount of Deduction

Export Turnover of

the undertaking Profits of the

business of

Total turnover of the

the Undertaking undertaking

Deduction depends upon quantum of profit

derived from export of articles or things or

services.


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Amount of Deduction

Deduction

First 5 consecutive AYs 100% of the profits

Next 5 consecutive AYs 50% of the profits

Next 5 consecutive AYsAny amt transferred to Special

Economic Zone Re-investment

Reserve Account

OR

50% of the profits

Whichever is lower


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Conditions for utilising the SEZ Re-

investment 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 yearin which the Special Reserve Account was created.

3. Until the acquisition of new plant & machinery the

Special Reserve Account can be utilised fordistribution of dividends/profits or for remittance

outside India as profit or for creating an asset outside

India.


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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 theyear in which the Special Reserve Account is

misutilised. If the Special Reserve Account is not

utilised for acquiring new plant & machinerywithin 3 years , then the deduction would be

taken back in the year immediately following the

period of 3 years.


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Special Provisions in respectof Newly Established 100%

Export Oriented Undertakings

Section 10B


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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


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Conditions To Be Satisfied

1. It must produce or manufacture articles or thingsor 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 themachinery or plant so transferred does not

exceed 20% of the total value of the plant or

machinery, this condition is not violated.


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4. There must be repatriation of sale proceeds into

India.

5. The assessee should furnish audit report in FormNo.56F along with the return of income. The

audit report must certify that the deduction has

been correctly claimed in accordance with theprovisions 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.


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Amount of Deduction

Export Turnover

Profits of the

business of

Total turnover of the the

business carried on undertaking

by the assessee


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Period of Deduction

The assessee can claim deduction under this

section from his total income for a period of 10

consecutive AYsbeginning with the AY relevant

to the PY in which the undertaking begins tomanufacture or produce such articles or things or

computer software.

No deduction under this section shall be allowedto any undertaking from the AY 2011-12


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Income of Venture CapitalFund or Venture Capital

Company

Section 10(23FB)


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This section has been inserted with

effect from the AY 2001-02


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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.


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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.


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Venture capital fund means:-

a fund which operates under a trust deed

registered under the provisions of the RegistrationAct or operates as a venture capital scheme made

by UTI;

a fund which has been granted a certificate ofregistration under SEBI Act, and regulations

made thereunder;

a fund which fulfils the conditions as may bespecified by SEBI by notification in the official

gazette.


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From AY 2008-09

Venture capital undertaking means such

domestic company whose shares are not listed ina 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.


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If the above 2 conditions are satisfied, then any

income of such venture capital fund or venture

capital company is exempt from tax u/s10(23FB).

The income of the venture capital company or

venture capital fund shall continue to be exemptif, the shares of the venture capital undertaking in

which the venture capital company or venture

capital fund has made the initial investment, aresubsequently listed in a recognized stock

exchange in India.


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THANK YOU

Exemptions 10A, 10AA, 10B

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