Corporate tax planning

By:-
Nehakumarigupta
Assistant professor
Department of commerce
Patna women’s college
Tax planning with reference to
setting up a new business
 1. Nature and size of business.
 2.Location of business.
 3.Form of business organisations.
 4. capital structure
Location and nature of business
 Agriculture income is fully exempt.sec10(1).
 Deduction in respect newly established units in special economic zone.
Sec 10AA.
 Deduction in respect of infrastructure development undertakings. Sec
80IA.
 Deduction in respect of an industrial undertaking or hotel etc. Sec
80IB.
 Deduction in respect of certain undertakings in certain special
category states. Sec 80IC.
 Deduction in respect of business of hotels and convention centres in
specified area. Sec 80 ID.
 Deduction in respect of certain undertakings in North- eastern
states.sec 80IE.
 Deduction in respect section 33AB.
 Deduction in respect of expenditure on specified business. Sec 35AD.
Special provisions in respect of newly
established unit in SEZ. Sec 10AA
 Eligible assessee:-
 All categories of assessee who derives any profits or gains from

an undertaking being a unit engaged in export of:-

a. Articles or things.
b. Providing any service.
Conditions :-
1.It has begun or begins to manufacture or produce articles
during the previous year, relevant to the assessment year
commencing on or after 1-04-2006 in any special economic
zone.
2.It should not be formed by the splitting of or reconstruction of
a business already existence.
3.It should not formed by the transfer of machinery or plant,
previously used for any purpose.
Exemption
First five consecutive year of 100% of such profits from
commencement undertaking from export.

Next five years 50% of profits from such

undertaking from exports.
Next 5 years Lower of the following:-
50% of profit from such
undertaking from exports.
Amt. Transferred to SEZ
reinvestment reserve account
subject to fulfilment of other
conditions specified in sec 10 AA.
 Profit from undertaking from export:-
 Profit = profit of SEZ unit x export turnover

of
 SEZ unit./
total
turnover
 Sec 10 B :- Newly established 100 % export
oriented undertakings:- No deduction shall
be allowed to any undertakings from the
assessment year 2012-2013.
 Sec 10 BA:- special provisions in respect

export of artistic handmade wooden articles:-

 No deduction will be available to an

undertaking from the Ay 2010-2011.

Deduction under sec 80IA in respect of profits and gains
from industrial undertaking or enterprises engaged in
infrastructure development.
 Deduction under section 80IA is available only to
the following business carried on by an industrial
undertaking:-
 A. Infrastructure undertaking.
 B. Telecommunication services.
 C. Developing, maintaining etc an industrial park.
 Power generation, transmission and distribution
or substantial renovation and modernisation of
existing distribution lines.
 Re construction or revival of a power generating
plant.
Infrastructure undertaking
 Infrastructure facility:-
a. A road including toll road, a bridge or a rail system.
b. A highway project including housing or other activities being an
integral part of the highway project.
c. A water supply project, water treatment system, irrigation project,
sanitation and sewerage or solid waste management system.
 Conditions :-

 Owned by an Indian company or their consortium.

 Agreement with central/state government.

 Start operation on or after1st April 1995.

 No deduction available on or after April 1,2017.

 Deduction:-

 100% of the profit is deductible for 10 consecutive assessment year

out of 15 years beginning with the year where undertaking operate.

Telecommunication services
 Eligible business:-
 Any undertaking provides telecommunication

services, whether basic or cellular including radio

paging, domestic satellite service network or
trunking , broad band network and internet services.
 Conditions:-
 Operation started on or after 1st April 1995 but on or

before 31st March,2005.

 Deduction:-
 A. First five years:- 100% of profit.
 B. Next five year:- 30% of profit.
Industrial park
 Conditions:-
 Undertaking engaged in development and operation.
 Operation and maintenance in industrial park and special

economic zone must start operation during April 1,1997

and March 31,2005.
 Begin to operate, develop etc at any time during April

1,2006 and 31st March, 2011.

 Notified by the central govt. Under the industrial park

scheme,2008.
 Deductions:-
 100% of profit for 10 consecutive assessment years out of

15 years beginning with the year in which undertaking

operates.
Power generation
 Eligible business:-an undertaking set up in any part of India for:-
a. Generation and distribution of power.
b. Transmission or distribution of power by laying a network of new transmission.
c. Substantial renovation and modernisation of existing network.
Conditions:-
a. Generation- operation start on or after 1 st April, 1993 but on or before 31 st
march,2017.
b. Transmission - operation start on or after 1 st April, 1999

but on or before 31st march,2017.

c. Substantial renovation :-
operation start on or after 1 st April, 2004 but on or before 31 st
march,2017.
it means increase of plant and machinery by at least 50% of the book value as on
1-04-2004.
Deduction :- 100% of profit for 10 consecutive assessment years out of 15 years
beginning with the year in which undertaking operates
Reconstruction or revival of power
 Eligible assessee:-
 Owned by an Indian company.
 Conditions:-
 Formed before 30-11-2005 with majority equity
participation by public sector companies.
 Notified by the central govt before 31-12-2005.
 Begin to generate or transmit or distribute power
before 31-03-2011.
 Deductions:-
 100% of profit for 10 consecutive assessment years out
of 15 years beginning with the year in which
undertaking operates.