DIRECT TAXES (SEC 10A,10AA,10B,10C)

 SEC 10 A TAX HOLIDAY FOR INDUSTRIAL UNITS IN FREE TRADE ZONES.(10 A)  TAX HOLIDAY FOR NEWLY EST (SECABLISHED UNITS IN SPECIAL ECONOMIC ZONES (10AA)  TAX HOLIDAY FOR 100% EXPORT ORIENTED UNDERTAKING SEC (10B)  SPECIAL PROVISION IN RESPECT OF CERTAIN INDUSTRIAL UNDERTAKINGS IN NORTH -EASTERN REGION. (10C.)

WHAT IS A SEZ? A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC).Free Trade Zonesforeign direct investment international businessmultinational corporation

SEC 10 A (TAX HOLIDAY FOR INDUSTRIAL UNITS IN FREE TRADE ZONES) Sec 10A relates to special provisions in respect of newly established industrial undertaking in free trade zones, export processing zones, electronic hardware, technological parks,software technological parks or SEZ’s notified by the central government. The section exempts the profits and gains of such undertakings derived from the export of articles or things or computer software. Assessees who are eligible to claim exemption: The benefit of exemption under this section is available to all categories of assessees who derive any profits or gain from an undertaking engaged in export of articles or things or computer software. The profit and gains derived from on-site development of computer software(including services for development of software) outside India shall be deemed to be the profits engaged derived from the export of computer software outside India.

Conditions to be satisfied for claiming exemptions: 1.It has begun manufacture or production(include the cutting and polishing of precious and semi precious stones) of articles in the previous year : –A.Y or thereafter in any FTZ; or –A.Y or thereafter in any electronic hardware technology park or Software technology park –A.Y or thereafter in any SEZ. 2. It has not formed by the splitting up or reconstruction of a business already in existence. 3.It has not formed by the transfer of machinery or plant previously used for any purpose.

4.The sale proceeds of articles, things or computer software exported out of India must be brought into India in convertible foreign exchange within 6 months from the end of the previous year or such further period as the competent authority may allow. 5.Form 56f along with the return of income certifying that the deduction has been correctly claimed should be submitted. He also should furnish return of his income on or before the due date specified u/s 139(1). 6. PERIOD OF TAX HOLIDAY: No deduction shall be available for A.Y and thereafter. Deduction shall be allowed maximum upto A.Y Such profits will be exempt for a period of 10 consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture.

Computation of profit from exports of such undertaking sec 10 a (4) Profits from business undertaking x Export turnover of the undertaking Total turnover of the business Example: X ltd furnished the following details for the P.Y Export sales: Domestic sales: Total sales: Money brought to India in convertible foreign exchange: Profits from business: Solution: Exemption available u/s 10A Profits from business undertaking x Export turnover of the undertaking Total turnover of the undertaking = X =

TAX HOLIDAY FOR NEWLY EST (SECABLISHED UNITS IN SPECIAL ECONOMIC ZONES (10AA) A deduction of profits and gains which are derived by an assessee being an entrepreneurship from the export of articles or things or providing any service, shall be allowed from the total income of the assessee. Assessees who are eligible for exemption.  Exemption is available to all categories of assessees who derive any profits or gain from an undertaking engaged in export of articles or providing any service during the previous year relevant to any assessment year commencing on or after the 1st day of April, Such assessee should be an entrepreneur referred to in sec2(j) of the SEZ act 2005 or a person who has been granted a letter of approval by the development commissioner under section 15(9)  Form 56f along with the return of income certifying that the deduction has been correctly claimed should be submitted. He also should furnish return of his income on or before the due date specified u/s 139(1).

PERIOD FOR WHICH DEDUCTION IS AVAILABLE  100% of profits and gains derived from the export or such articles or things or services for a period of consecutive A.Y. beginning with A.Y. relevant to the P.Y. in which the unit begins to manufacture or produce such articles or things or provide services.  50% of such profits and gains for further 5 A.Y.  A further deduction for 5 consecutive years shall be so much of the amount not exceeding 50% of the profits as is debited to the P&L a/c of the P.Y. in respect of which the deduction is to be allowed and created to a reserve a/c created and utilized in the manner laid down under sec 10AA(2) COMPUTATION OF PROFITS: Profits from business undertaking x Export turnover of the undertaking Total turnover of the business

SEC 10A NOT APPLICABLE FOR UNITS REFERRED TO u/s 2(zc) OF THE SEZ ACT Unit means unit set up by an entrepreneur in a sez and includes an existing unit, an offshore banking unit and a unit in an international financial service centre, whether established before or after the commencement of the act

TAX HOLIDAY FOR 100% EXPORT ORIENTED UNDERTAKING SEC (10B)  The section exempts the profits and gains of an undertaking derived from the export of articles or things or computer software.such profit will be exempt for a period of 10 consecutive years A.Y. beginning with the A.Y. relevant to the P.Y. in which the undertaking begins to manufacture such articles or things or computer software as the case may be.  However no deduction under this section would be available to any undertaking for A.Y and subsequent years.

CONDITIONS FOR CLAIMING EXEMPTION  The sale proceeds of articles, things or computer software exported out of India must be brought into India in convertible foreign exchange within 6 months from the end of the previous year or such further period as the competent authority may allow.  Sale proceeds are credited to a separate account maintained by the asseessees with any bank outside India with the approval of RBI, such sale proceeds are deemed to be received in India.  Form 56G along with the return of income certifying that the deduction has been correctly claimed should be submitted. He also should furnish return of his income on or before the due date specified u/s 139(1). COMPUTATION OF PROFITS: Profits from business undertaking x Export turnover of the undertaking Total turnover of the undertaking

Special provision in respect of certain industrial undertakings in North -Eastern Region. 10C.  Subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking, which has begun or begins to manufacture or produce any article or thing on or after the 1st day of April, 1998 in any Integrated Infrastructure Development Centre or Industrial Growth Centre located in the North-Eastern Region (hereafter in this section referred to as the industrial undertaking) shall not be included in the total income of the assessee.  This section applies to any industrial undertaking which fulfils all the following conditions, namely : 1. It is not formed by the splitting up, or the reconstruction of, a business already in existence : 2.Provided that this condition shall not apply in respect of any industrial undertaking which is formed as a result of the re- establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section ;section 33B

3. It is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation.  Integrated Infrastructure Development Centre means such centers located in the States of the North-Eastern Region, which the Central Government, may, by notification in the Official Gazette, specify for the purposes of this section;  Industrial Growth Centre means such centers located in the States of the North-Eastern Region, which the Central Government may, by notification in the Official Gazette, specify for the purposes of this section;  North-Eastern Region means the region comprising the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;  relevant assessment years means the ten consecutive years beginning with the year in which the industrial undertaking begins to manufacture or produce articles or things.

THANK U …. BY, SHAAZ AHMED SHARIFF.E