FACTORS TO BE CONSIDERED

 NATURE, SIZE AND LOCATION OF

BUSINESS
 FORM OF BUSINESS ORGANISATION
 CAPITAL STRUCTURE
 Sec. 10(1) – Agricultural income is fully exempted
 Sec. 10AA – Income from newly established units in SEZs –
Consecutive 15 AY – Exempted

Deductions in respect of profits and gains from business

 80 IA – Income from infrastructure development

 80 IAB – Undertakings engaged in developments of SEZs
 80 IB – Other than infrastructure development undertaking
 80 IC – Undertakings in certain special category states
 80 IE – Undertakings in North- Eastern states
 80 JJA – Collecting and processing of bio-degradable wastes
(5 AYs)
 80 IAC – Income from Specified business
 80 IBA – Income from housing projects
TAX PLANNING IN RESPECT OF ASSESSEES
ENGAGED IN CERTAIN BUSINESS
A. Tax Planning for tea, coffee or rubber industry
I. Partly Agricultural Income – Sec. 10(1)
 Income from manufacture of tea
 60% - Agricultural income
 40% - Business Income
 Manufacture of coffee
 Grown and cured in India : 75% - AI ; 25% - BI
 Grown, Cured, Roasted and grounded : 60% - AI ; 40% - BI
 Manufacture of Centrifuged Latex or Cenex
 65% - AI ; 35% - BI
II. Subsidy
- Subsidy from Tea Board U/s 10(30)
- Subsidy from certain boards U/s 10(31)

Subsidy received for replantation, replacement,

rejuvenation or consolidation of area used for
cultivation (Certificate of amt. of subsidy
furnished to AO) -
Deductible
III. Deduction in respect of amt. deposited in Development
Account U/s 33 AB
- Deposited in a bank account with NABARD approved
by Tea, Coffee and Rubber Board
- Deposited in Deposit A/c on a scheme framed by
Tea, Coffee and Rubber Board

Before expiry of 6 months from end of PY

OR whichever is earlier
Before due date of furnishing return

Deductible amt. – Amt. deposited

OR 40% of profits of business whichever is less
 CONDITIONS FOR DEDUCTION

• Audited by CA, duly signed, verified in prescribed form

and electronically furnished
• Amt. withdrawn for being utilised by the assessee for
the purpose of business in accordance with the scheme
or deposit A/c
Fully utilised – Will not be allowed in computing
income under B/P
Partially utilised – Unutilised amt. will be treated as
income for PY
• Sale or transfer not allowed within 8 years
B. Tax Planning for hospitals
Conditions for deduction regarding Capital expenditure
in respect of business of building new hospitals anywhere in
India operating it atleast 100 beds for patients.
• Should be new business
• Commenced after 31.03.2010
• Capital expenditure is incurred prior to commencement of its
operation
• Amt. is capitalised in the books of account on the date of
commencement of its operation
• Capital expenditure shall not include expenditure incurred on
acquisition of land or goodwill or financial instrument
• Assessee shall get his accounts audited in electronic form
• Sale or transfer of asset not allowed within 8 years
C. Tax Planning for hotels
(1) Engaged in business of hotel in North- Eastern States ( Arunachal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura)
(1.4.2007 – 31.03.2017) = 10 consecutive AY – 100% profit is deductible
Conditions for deduction
1. New business
2. Not formed by transfer of machinery or plant
3. Assessee shall get his accounts audited in electronic form

(2) Deduction regarding capital expenditure

•Should be new business

• Commenced after 31.03.2010
• Capital expenditure is incurred prior to commencement of its operation
• Amt. is capitalised in the books of account on the date of commencement
of its operation
• Capital expenditure shall not include expenditure incurred on acquisition of
land or goodwill or financial instrument
• Assessee shall get his accounts audited in electronic form
• Sale or transfer of asset not allowed within 8 years
D. Tax planning for the business of generation
and distribution of power

1. Depreciation
Claim depreciation on assets acquired after 31.3.1997 on the basis
of actual cost instead of WDV method
Additional depreciation – 20% on actual cost

2. Deduction from GTI

Undertaking which
•Begins to generate power from 31.3.1993 to 1.4.2017
•Starts new transmission by laying network of distribution lines from
31.3.1999 to 1.4.201
•Renovation of existing network from 31.3.2004 to 1.4.2017

Quantum and period of deduction – 100% of such profits for 10

consecutive AY
Conditions for deduction
•Not formed by splitting up or reconstruction of existing business

Exception
Industrial undertaking discontinued due to destruction of plant,
machinery and re-established before expiry of 3 years from end of
PY as a result of
•Flood, typhoon, hurricane, cyclone, earthquake
•Riot or civil disturbance
•Accidental fire or explosion
•Action by enemy (declaration of war)

•Not formed by transfer to a new business of machinery or plant

previously used
E. Tax planning for the business of infrastructure
facility
Infrastructure facility means
• A road including toll road or a rail system
•Water supply project, irrigation project or solid waste management system
•Highway project
•A port, airport, inland water ways or navigation channel in the sea

Conditions for deduction

•Owned by company registered in India or by authority or board or corporation
•Enter into agreement with Central or state or local authority
•Profits must be transferred to Special Reserve Account
•File an audit report electronically

Amt of deduction – 100% of profit for 10 consecutive AY

F. Tax planning for business of natural
gas
Provision
•Deduction will be allowed if the Central Govt. Has entered into
an agreement with the assessee
•Assessee has before the end of the PY has deposited the amt
•In a special account with SBI in a scheme approved by
Ministry of Petroleum or Natural gas
•In an account – Site Restoration Account
•Quantum of deduction – amt deposited or 20% of profit of such
business : whichever is less
•Account must be audited for PY and the report must be
furnished on demand in Form No. 3 AD
G. Tax planning for eligible business
•Provisions of Sec. 44AD are applicable to an eligible assessee who is engaged
in eligible business where income shall be presumed to be
•6% of total turnover or gross receipt received by an account paying cheque
or draft through a bank account during the PY
•8 % of total turnover or gross receipt during PY not provided in above
•Eligible assessee means an individual HUF or partnership firm who is a resident
or who has not claimed deduction under section 10AA, 80IA, 80IAB, 80IB, etc.
•Eligible business means any business except the business of plying, hiring or
leasing goods carriages or business whose total turnover does not exceed one
crore in PY
•When income is deemed under section 44AB, no deduction u/s 30 – 38 shall be
allowed
•It shall be deemed that assessee had already claimed the depreciation on the
assets as it had been already allowed
•The provisions of the section shall not apply to
•A person carrying on profession u/s 44AA
•A person earning brokerage or commission
•A person carrying on agency business
H. Tax planning for business of plying, hiring or
leasing goods carriages – section 44AE
•The income from heavy goods vehicle shall be Rs.1000 per ton of gross vehicle
weight
•Profits and gains from each goods vehicle other than heavy shall be Rs. 7500
for every month during which the vehicle is owned by the assessee in PY
•When income is deemed under section 44AE no deduction under section 30 –
38 shall be allowed
•It shall be deemed that the assessee had claimed the depreciation on the assets
and it had been already allowed
•Where the assessee is a firm the salary and interest paid to its partners shall be
deducted from the income as per section 40(b)
•The assessee shall not be required to maintain and audit the accounts as per
sections 44AA and 44AB
•If the assessee is engaged in any other business along with the aforesaid
business in computing the monetary limits u/s 44AA and 44AB the income from
aforesaid business shall be excluded
•The scheme is optional and if assessee claims the profit less than the deemed
profits then he has to maintain, audit and furnish the account books electronically
I. Tax Planning for shipping companies
• Sections 28 – 43C – income from qualifying ships on the basis of
deemed income
• A ship is qualifying if
• It is a sea-going ship or vessel of 15 net tonnage or more
• Ship registered under Merchant Shipping Act (1958) or a ship
registered outside India for which the license issued by director
general of shipping
• A valid certificate in respect of such ship indicating its net
tonnage
• But it does not include fishing vessel, factory ship, pleasure craft,
harbour-river ferries, off-shore installations, etc.
• A separate book of accounts has to be maintained by the qualifying
company and should be audited by CA and furnish electronically
 FORM OF BUSINESS
ORGANIZATIONS
•INDIVIDUAL
•An individual is entitled to deduction from his GTI for the AY 2020-21
•80C - Life insurance premium housing loan, PPF –
•80CCC - Pension Fund - 1,50,000 max
•80D - Insurance Premium on the health of self, spouse,
dependent children or contribution to central government health
scheme – Rs. 25,000
•80DD - Disability Rs.75,000; Severe disability Rs.1,25,000
•80DDB - Medical treatment of specified disease or ailment
•80E - Amount of interest paid on loan taken for higher studies
•80EE – Interest payable on loan for acquisition of residential
house – Rs. 50,000
•80GG – Expenditure on house rent – 25% of TI or 5000 p.m
whichever is less
•80U – Disability – 75,000; severe disability – 1,25,000
•80TTA – Interest on SB account upto 10,000
•80TTB – Interest upto senior citizens 50,000
Hindu Undivided Family

HUF is entitled to the deductions from GTI u/s 80C, 80D, 80DD, 80DDB
and 80TTA

Firm or LLP
In computing the business income the following payments to the partners
are deductible:
•Interest on capital or loan not exceeding 12% p.a
•Remuneration to working partners not exceeding
•On first 3 lakhs of the book profits at 90% or 1,50,000 whichever is
more
•On balance of the book profits at 60%
•The share of a partner in the TI of the firm is exempt u/s 10(2A)
•A partner being an individual is entitled to the same deductions from his
GTI as discussed under individual.