SEC 10AA OF THE INCOME TAX ACT 1961

SEZ units are eligible to take following deduction starting with the AY relevant to the previous year in which the unit begins to manufacture or produce goods or provide services.

AMENDMENT INSERTED IN FINANCE ACT 2017

  • Explanation inserted for sub section 1 of sec 10AA with effect from 1/4/2018 (i.e from AY 2018-19)

  • It is hereby declared that the amount of deduction under this section shall be allowed from the total income of the assessee computed in accordance with the provisions of this Act, before giving effect to the provisions of this section and the deduction under this section shall not exceed such total income of the assessee.

Note :

  • Export turnover means total export turnover of the undertaking

  • Total income of the assessee means the total profits of undertaking derived from the export of goods and services.

The following amendment can be explained with the below mentioned examples, which runs as follows:

Assumption

The below SEZ unit is assumed to be in the first year from which it had commenced the operations and so it can 100% deduction on export profits.

Conclusion

Thus from the AY 2018-19, SEZ units are eligible to avail deduction u/s 10AA not exceeding the total profits of the undertaking.

Disclaimer:"The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation."

Prepared By

Bhavya

Reviewed By

Phalgun

Happy to Help you

Contact :

Ankit C Shetty

[email protected]