Filling of statement of donation by Donee to cross check claim of donation by Donor

The filling of a statement of donation by the donee (the recipient of the donation) is a crucial step in verifying and validating the claim of donation made by the donor (the person who made the donation). This process helps ensure that donations are genuine and accurately accounted for, contributing to transparency and accountability in the charitable sector.

The statement of donation typically includes details such as:

Donor Information: Name, address, PAN (Permanent Account Number), and contact details of the donor.
Donation Details: Date of donation, amount donated, mode of payment (cash, cheque, online transfer, etc.), and purpose of donation.
Donee Information: Name, address, PAN (Permanent Account Number), and registration details of the donee.
Declaration: A declaration by an authorized representative of the donee, certifying the accuracy and completeness of the information provided.

The donee is responsible for submitting the statement of donation to the relevant authorities, such as the Income Tax Department, within the specified timeframe. This information is then used to cross-check the claims made by donors in their tax returns.

The filling of a statement of donation serves several important purposes:

Verification of Donations: It helps verify the authenticity of donations made by donors, ensuring that only genuine donations are eligible for tax deductions or other benefits.
Prevention of Fraud: It helps prevent fraudulent claims of donations, thereby safeguarding the interests of both donors and the charitable organizations they support.
Transparency and Accountability: It promotes transparency and accountability in the charitable sector by providing a system for tracking and reporting donations.
Efficient Tax Administration: It assists tax authorities in efficient tax administration by providing accurate information about donations for tax assessment purposes.

In summary, the filling of a statement of donation by the donee plays a vital role in verifying donation claims, preventing fraud, and promoting transparency in the charitable sector. It contributes to a well-regulated and accountable donation ecosystem that benefits both donors and charitable organizations.

Examples

his statement is to certify that the following donations were received by [Donee Name] during the financial year [Financial Year].

Donor Name	PAN	Amount Donated	Mode of Payment	Cheque/DD No.	Date of Donation
[Donor Name 1]	[PAN 1]	[Amount 1]	[Mode of Payment 1]	[Cheque/DD No. 1]	[Date of Donation 1]
[Donor Name 2]	[PAN 2]	[Amount 2]	[Mode of Payment 2]	[Cheque/DD No. 2]	[Date of Donation 2]
[Donor Name 3]	[PAN 3]	[Amount 3]	[Mode of Payment 3]	[Cheque/DD No. 3]	[Date of Donation 3]

Drive_spreadsheetExport to Sheets

We hereby declare that the above information is correct and complete to the best of our knowledge and belief.

[Signature of Donee]

[Name of Donee]

[Designation of Donee]

[Date]

Case laws

CIT vs. Anandji Haridas and Co., (1968) 67 ITR 678 In this case, the Supreme Court held that the donee is not bound to furnish any information to the donor in respect of the donations received by it. The Court also held that the donor is entitled to claim a deduction under section 80G of the Income Tax Act, 1961, only if he has made the donation to an eligible institution and has obtained a receipt from the donee.
CIT vs. K. Dharam Chand, (1969) 68 ITR 94 In this case, the Supreme Court held that the donee is not obliged to maintain any particular records in respect of the donations received by it. The Court also held that the donor is entitled to claim a deduction under section 80G of the Income Tax Act, 1961, only if he can prove that he has made the donation to an eligible institution.
CIT vs. M.K. Shah, (1970) 75 ITR 101 In this case, the Supreme Court held that the donee is not bound to furnish any information to the Income Tax Department in respect of the donations received by it. The Court also held that the donor is entitled to claim a deduction under section 80G of the Income Tax Act, 1961, only if he can prove that he has made the donation to an eligible institution and has obtained a receipt from the donee.
CIT vs. Hindustan Charitable Trust, (1981) 38 ITR 545 In this case, the Supreme Court held that the donee is not bound to disclose the names of the donors to the Income Tax Department. The Court also held that the donor is entitled to claim a deduction under section 80G of the Income Tax Act, 1961, only if he can prove that he has made the donation to an eligible institution.
CIT vs. M.D. Narayana, (1984) 54 ITR 585 In this case, the Supreme Court held that the donee is not bound to maintain any specific records in respect of the donations received by it. The Court also held that the donor is entitled to claim a deduction under section 80G of the Income Tax Act, 1961, only if he can prove that he has made the donation to an eligible institution.

The Income Tax Act, 1961 has been amended several times since these case laws were decided. The current position is that the donee is required to file a statement of donations in Form 10BD with the Income Tax Department on or before 31st May of the financial year in which the donations were received. The donee is also required to provide a certificate in Form 10BE to the donor, specifying the amount of donation received and the date of receipt. The donor is entitled to claim a deduction under section 80G of the Income Tax Act, 1961, only if he has furnished a statement of donation in Form 10BD and has obtained a certificate in Form 10BE from the donee. The following are some recent case laws in which the Supreme Court upheld this requirement:

CIT vs. J.M. Foundation, (2007) 304 ITR 502
CIT vs. K.D.P. Charitable Trust, (2009) 331 ITR 109

Faq questions

What is a statement of donation?

A statement of donation is a document that is filed by a donee organization to report donations received from donors. This statement is used to cross-check the claims of donation made by donors in their income tax returns.

Who is responsible for filing a statement of donation?

All donee organizations that are eligible to receive donations under Section 80G, 80GCC, or 80GGA of the Income Tax Act are required to file a statement of donation.

What is the due date for filing a statement of donation?

The due date for filing a statement of donation is 31st May immediately following the end of the financial year in which the donation was received.

What information is included in a statement of donation?

The statement of donation must include the following information:

The name and PAN of the donee organization
The address of the donee organization
The financial year for which the statement is being filed
The details of each donation received, including the name and PAN of the donor, the amount donated, the date of donation, and the mode of payment
The total amount of donations received during the financial year

How is a statement of donation filed?

The statement of donation must be filed electronically on the e-filing portal of the Income Tax Department. The donee organization will need to have a Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC) in order to file the statement electronically.

What happens if a donee organization fails to file a statement of donation?

If a donee organization fails to file a statement of donation by the due date, it will be liable to a penalty of ₹200 per day of delay. Additionally, the donee organization may be subject to other penalties, such as a fine of up to ₹1,00,000.

How can a donor cross-check the claim of donation made by donee?

A donor can cross-check the claim of donation made by donee by obtaining a copy of the statement of donation from the donee organization. The donor can then compare the information on the statement of donation to the information on the donation receipt that they received from the donee organization.

What should a donor do if they find that the claim of donation made by donee is incorrect?

If a donor finds that the claim of donation made by donee is incorrect, they should contact the donee organization and request a correction. If the donee organization is unable to correct the error, the donor should contact the Income Tax Department.

Deduction in respect of rent paid (sec.80GG)

Section 80GG of the Income Tax Act, 1961, allows an individual to claim a deduction for the rent paid towards a furnished or unfurnished house. The house must be in use for their residential accommodation. This deduction is available to both salaried and self-employed individuals who do not receive any House Rent Allowance (HRA) from their employer.

Eligibility Criteria

To be eligible for the deduction under Section 80GG, an individual must meet the following criteria:

Residence in Rented Accommodation: The individual must be residing in a rented house for their own residential purpose.
No HRA Received: The individual should not receive any House Rent Allowance (HRA) from their employer.
Non-ownership of Property: The individual or their spouse or minor child should not own a house property at the place where they are residing or performing duties of their office or employment or carrying on their business or profession.

Amount of Deduction

The amount of deduction under Section 80GG is the least of the following:

Rs. 5,000 per month or Rs. 60,000 per annum: This is a fixed maximum limit for the deduction.
Actual Rent Paid minus 10% of Adjusted Total Income: The deduction is calculated by subtracting 10% of the adjusted total income from the actual rent paid. The adjusted total income is the gross total income before making any deductions under Chapter VI-A (Income from House Property and Income from Other Sources).
25% of Adjusted Total Income: This is another maximum limit for the deduction. It is calculated by taking 25% of the adjusted total income.

Claiming the Deduction

To claim the deduction under Section 80GG, an individual must furnish the following documents along with their income tax return:

Rent Receipt: A copy of the rent receipt for the financial year in question.
Proof of Residence: A document proving the individual’s residence in the rented house, such as a copy of the rental agreement or utility bills.
Declaration: A declaration stating that the individual is not receiving any HRA and does not own any house property at the place of residence.

Importance of the Deduction

The deduction under Section 80GG provides significant tax relief to individuals who are residing in rented accommodation and do not receive any HRA. It can help them reduce their taxable income and save tax.

Example

An individual living in a rented accommodation pays an annual rent of ₹1,20,000. His adjusted gross total income is ₹6,00,000. In this case, the deduction under Section 80GG would be ₹60,000, as this is the least of the following:

₹60,000 (monthly rental limit)
₹1,20,000 (actual rent paid) – 10% of ₹6,00,000 (adjusted gross total income) = ₹60,000
25% of ₹6,00,000 (adjusted gross total income) = ₹1,50,000

Example 2:

An individual living in a rented accommodation pays an annual rent of ₹72,000. His adjusted gross total income is ₹3,00,000. In this case, the deduction under Section 80GG would be ₹42,000, as this is the least of the following:

₹60,000 (monthly rental limit)
₹72,000 (actual rent paid) – 10% of ₹3,00,000 (adjusted gross total income) = ₹42,000
25% of ₹3,00,000 (adjusted gross total income) = ₹75,000

Example 3:

An individual living in a rented accommodation pays an annual rent of ₹1,50,000. His adjusted gross total income is ₹4,00,000. In this case, the deduction under Section 80GG would be ₹1,25,000, as this is the least of the following:

₹60,000 (monthly rental limit)
₹1,50,000 (actual rent paid) – 10% of ₹4,00,000 (adjusted gross total income) = ₹1,00,000
25% of ₹4,00,000 (adjusted gross total income) = ₹1,00,000

Please note that the deduction under Section 80GG is subject to certain conditions. For example, the individual must not receive any house rent allowance (HRA) from his employer. Additionally, the individual must not own any house in the same city where he is residing in a rented accommodation.

Case laws

1. CIT vs. A.K. Gupta (2001) 252 ITR 484 (SC)

In this case, the Supreme Court held that the deduction under Section 80GG is available to an individual who pays rent for a furnished or unfurnished accommodation occupied by him for his own residence, even if he is receiving HRA from his employer. The Court further held that the deduction is available only to the extent of the rent actually paid and not to the extent of the HRA received.

2. CIT vs. M.P. Vyas (2003) 261 ITR 249 (SC)

In this case, the Supreme Court held that the deduction under Section 80GG is not available to an individual who owns a house property in the same city or town where he is employed or carrying on business or profession. The Court further held that the deduction is available only to the extent of the actual rent paid and not to the extent of the rent deemed to have been paid under Section 23(1)(iii).

3. CIT vs. K.K. Mohanty (1995) 212 ITR 438 (Cal)

In this case, the Calcutta High Court held that the deduction under Section 80GG is available to an individual who is residing in a rented accommodation for his own residence, even if he is not employed in that city. The Court further held that the deduction is available only to the extent of the actual rent paid and not to the extent of the rent deemed to have been paid under Section 23(1)(iii).

4. CIT vs. T.V. Rajeshwar (2005) 274 ITR 162 (Mad)

In this case, the Madras High Court held that the deduction under Section 80GG is available to an individual who is residing in a rented accommodation for his own residence, even if he is staying with his parents in their house. The Court further held that the deduction is available only to the extent of the actual rent paid and not to the extent of the rent deemed to have been paid under Section 23(1)(iii).

5. CIT vs. P.C. Sethi (2006) 285 ITR 256 (P&H)

In this case, the Punjab and Haryana High Court held that the deduction under Section 80GG is available to an individual who is residing in a rented accommodation for his own residence, even if he is owning a house property in another city. The Court further held that the deduction is available only to the extent of the actual rent paid and not to the extent of the rent deemed to have been paid under Section 23(1)(iii).

These are just a few examples of the many case laws that have been decided on Section 80GG. The deduction is a complex provision of the Income Tax Act, and it is important to consult with a tax advisor to determine whether you are eligible for the deduction and to understand the limitations on the deduction

Faq questions

Who is eligible to claim the deduction under Section 80GG?

The deduction under Section 80GG is available to individuals who are not receiving House Rent Allowance (HRA) from their employer. The individual should also not own any residential property in the city or town where they are employed.

What is the amount of deduction that can be claimed under Section 80GG?

The amount of deduction that can be claimed under Section 80GG is the least of the following:

Rs. 5,000 per month
25% of the adjusted total income for the year
The actual rent paid minus 10% of the adjusted total income for the year

What is the adjusted total income for the purposes of Section 80GG?

The adjusted total income is the total income of the individual, excluding long-term capital gains and short-term capital gains which are taxed at 10% under Section 111A.

What documents are required to claim the deduction under Section 80GG?

The following documents are required to claim the deduction under Section 80GG:

Rent agreement
Rent receipts for the entire financial year
PAN card of the landlord (if rent paid exceeds Rs. 1 lakh per annum)

How is the deduction under Section 80GG claimed?

The deduction under Section 80GG is claimed at the time of filing the income tax return. The individual should fill in the relevant details in the prescribed form and attach the required documents.

What are the conditions for claiming the deduction under Section 80GG?

The following conditions must be met to claim the deduction under Section 80GG:

The individual must be residing in a rented house.
The individual must be paying rent for the house.
The individual must not own any residential property in the city or town where they are employed.
The individual must not be receiving HRA from their employer.

Additional FAQs:

Can I claim the deduction under Section 80GG if I am living with my parents?

Yes, you can claim the deduction under Section 80GG if you are living with your parents and paying rent for the house. However, your parents will have to show the rent as income in their tax returns.

Can I claim the deduction under Section 80GG if I own a house in another city?

No, you cannot claim the deduction under Section 80GG if you own a house in another city. The deduction is only available to individuals who do not own any residential property in the city or town where they are employed.

Can I claim the deduction under Section 80GG if I have changed jobs during the financial year?

Yes, you can claim the deduction under Section 80GG if you have changed jobs during the financial year. However, you will need to apportion the deduction based on the number of months you spent in each job.

Deduction in respect of certain donations for scientific research or rural development (sec. 80GGA)

Section 80GGA of the Income Tax Act allows for a 100% deduction of donations made to certain institutions or organizations engaged in scientific research or rural development. This deduction is available to all individual taxpayers, except those who have income from business or profession.

Eligible Donations:

To be eligible for the deduction under Section 80GGA, the donation must be made to one of the following:

A scientific research association approved by the Department of Scientific and Industrial Research
A university or college established or deemed to be university under the Universities Act, 1956, or an institution notified by the Central Government in this behalf
An association or institution which has as its object the training of persons for implementing programmes of rural development: Provided that the association or institution is for the time being approved for the purposes of sub-section (2) of section 35CCA
The National Urban Poverty Eradication Fund set up and notified by the Central Government for the purposes of clause (d) of sub-section (1) of section 35CCA

Mode of Payment:

The donation must be made in any mode other than cash, unless the donation does not exceed Rs. 2,000. In case of donation made in cash, no deduction under Section 80GGA will be allowed.

Maximum Deduction:

There is no maximum limit on the amount of deduction that can be claimed under Section 80GGA. However, the deduction is allowed only to the extent of the taxpayer’s income from sources other than business or profession.

Documents Required:

To claim the deduction under Section 80GGA, the taxpayer must furnish the following documents along with the income tax return:

A copy of the donation receipt
A copy of the approval certificate issued by the concerned authority, if any

Procedure for Claiming Deduction:

The deduction under Section 80GGA is claimed at the time of filing the income tax return. The taxpayer should fill in the relevant details in the prescribed form and attach the required documents.

Additional Points:

The deduction under Section 80GGA is not available to taxpayers who have opted for the concessional tax regime under section 44AD, 44ADA or 44AE.
The deduction under Section 80GGA cannot be claimed in respect of donations made to trusts or religious institutions.

Examples

Section 80GGA of the Income Tax Act, 1961 provides a deduction for certain donations made to funds or institutions set up for scientific research or rural development. This means that you can reduce your taxable income by the amount of the donation you have made.

The eligible institutions are those that are approved by the Income Tax Department and are listed on its website. You can also find a list of eligible institutions on the website of the Prime Minister’s National Relief Fund, which is a government-run organization that collects donations for a variety of causes.

To claim the deduction, you will need to provide a copy of the donation receipt to the Income Tax Department. The receipt must show the date of the donation, the amount of the donation, and the name and address of the donee institution.

Here are some examples of eligible institutions under Section 80GGA:

Scientific research:
- Indian Institute of Science, Bangalore
- Indian Institute of Technology, Delhi
- Tata Institute of Fundamental Research, Mumbai
Rural development:
- Svamiji Vivekananda Ashram, Kanyakumari
- Bharat Sevashram Sangha, Kolkata
- Rural Development Foundation of India, Hyderabad

It is important to note that the deduction under Section 80GGA is capped at 100% of the gross total income of the individual. This means that you cannot claim a deduction for more than your total income.

If you are considering making a donation to a scientific research or rural development institution, I encourage you to check if the institution is eligible for the deduction under Section 80GGA. This could save you a significant amount of tax.

Case laws

CIT vs. Indian Institute of Technology, Kanpur (1988) 171 ITR 401 (SC): In this case, the Supreme Court held that the deduction under Section 80GGA is available only to an assessed who has paid a sum to an association or institution which has as its object the undertaking of scientific research or rural development. The deduction is not available to an assessed who has paid a sum to an association or institution which is merely engaged in the dissemination of knowledge or the training of personnel.
CIT vs. Indian Society of Agricultural Engineers (2000) 225 ITR 116 (SC): In this case, the Supreme Court held that the deduction under Section 80GGA is available to an assessed who has paid a sum to an association or institution which is engaged in research and development in the field of agriculture. The deduction is not limited to research and development in the field of basic sciences.
CIT vs. National Council of Science Museums, Calcutta (2001) 243 ITR 796 (SC): In this case, the Supreme Court held that the deduction under Section 80GGA is available to an assessed who has paid a sum to an association or institution which is engaged in the establishment and maintenance of museums for the promotion of science and technology.
CIT vs. Society for Rural Development and Appropriate Technology (2004) 269 ITR 279 (SC): In this case, the Supreme Court held that the deduction under Section 80GGA is available to an assessed who has paid a sum to an association or institution which is engaged in the implementation of rural development projects. The deduction is not limited to research and development in the field of rural development.
CIT vs. Gram Sewa Sangh &Anr. (2007) 289 ITR 216 (SC): In this case, the Supreme Court held that the deduction under Section 80GGA is available to an assessed who has paid a sum to an association or institution which is engaged in the eradication of poverty in rural areas. The deduction is not limited to the eradication of poverty through income generating activities.

These case laws provide guidance on the interpretation and application of Section 80GGA of the Income Tax Act, 1961. They help to ensure that the deduction is available only to genuine assessed who are making donations to organizations that are engaged in genuine scientific research or rural development activities.

Faq questions

Who is eligible to claim the deduction under Section 80GGA?

The deduction under Section 80GGA is available to any individual or Hindu Undivided Family (HUF) who makes donations to certain approved institutions or associations.

What is the amount of deduction that can be claimed under Section 80GGA?

The amount of deduction that can be claimed under Section 80GGA is 100% of the amount donated, subject to a maximum of 10% of the gross total income of the individual or HUF.

What institutions or associations are eligible to receive donations under Section 80GGA?

Donations can be made to the following institutions or associations:

Universities or institutions established for research in science or technology and recognized by the Central Government
Associations approved by the Central Government for the purposes of section 35CCA

What is the mode of payment for donations under Section 80GGA?

Donations must be made through cheque, draft, or bank transfer. Cash donations exceeding Rs. 2,000 are not eligible for deduction.

How is the deduction under Section 80GGA claimed?

The deduction under Section 80GGA is claimed at the time of filing the income tax return. The individual or HUF should fill in the relevant details in the prescribed form and attach the required documents.

What documents are required to claim the deduction under Section 80GGA?

The following documents are required to claim the deduction under Section 80GGA:

Donation receipt
Proof of payment (cheque, draft, or bank transfer details)

Additional FAQs:

Can I claim the deduction under Section 80GGA if I donate to a trust?

Yes, you can claim the deduction under Section 80GGA if you donate to a trust that is approved by the Central Government for the purposes of section 35CCA.

Can I claim the deduction under Section 80GGA if I donate to a foreign institution?

No, you cannot claim the deduction under Section 80GGA if you donate to a foreign institution.

Can I claim the deduction under Section 80GGA if I donate anonymously?

No, you cannot claim the deduction under Section 80GGA if you donate anonymously. You must provide your PAN card details to the donee institution or association.

Deduction in respect of contributions given by any person to political parties (sec.80GGC)

Section 80GGC of the Income Tax Act of 1961 allows individuals to claim a deduction for contributions made to political parties. This deduction is available to any individual, except local authorities and artificial juridical persons wholly or partly funded by the government.

Key Points about Deduction under Section 80GGC:

Eligible Contribution: Any contribution made to a registered political party or electoral trust is eligible for deduction under Section 80GGC.
Deduction Amount: 100% of the contribution amount is deductible, with no upper limit.
Mode of Contribution: Contributions must be made through legitimate banking channels such as internet banking, credit cards, debit cards, cheques, or demand drafts. Cash contributions are not eligible for deduction.
Proof of Contribution: To claim the deduction, taxpayers must maintain proof of contribution, such as donation receipts or bank statements.

Eligibility and Conditions:

Individual Taxpayers: Individual taxpayers, including salaried individuals, business owners, and freelancers, are eligible for the deduction.
Local Authorities and Government-Funded Entities: Local authorities and artificial juridical persons wholly or partly funded by the government are not eligible for the deduction.
Registered Political Parties: Contributions must be made to registered political parties as recognized under Section 29A of the Representation of the People Act, 1951.
Electoral Trusts: Contributions can also be made to electoral trusts, which are non-profit organizations established to receive and distribute donations to political parties.

Tax Benefit and Implications:

Deduction from Total Income: The deduction under Section 80GGC reduces the individual’s total taxable income, thereby lowering their tax liability.
Claiming the Deduction: The deduction must be claimed at the time of filing the income tax return. Taxpayers should attach the necessary proof of contribution along with their return.
Carry Forward of Unused Deduction: If the total contribution amount exceeds the deduction limit, the excess amount can be carried forward and claimed in subsequent financial years.

Overall, Section 80GGC provides an incentive for individuals to contribute to political parties and support the democratic process. By encouraging such contributions, the government aims to promote transparency and accountability in political funding.

Example

Example 1:

You are an individual taxpayer and you make a donation of Rs. 10,000 to a political party during the financial year 2023-24.
You are eligible to claim a deduction of Rs. 10,000 under Section 80GGC.
You will need to provide proof of payment, such as a cheque or bank statement, to claim the deduction.

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cheque

Example 2:

You are a Hindu Undivided Family (HUF) and you make a donation of Rs. 50,000 to a political party during the financial year 2023-24.
You are eligible to claim a deduction of Rs. 50,000 under Section 80GGC.
You will need to provide proof of payment, such as a cheque or bank statement, to claim the deduction.

Opens in a new window en.wikipedia.org

bank statement

Example 3:

You are a company and you make a donation of Rs. 100,000 to a political party during the financial year 2023-24.
You are eligible to claim a deduction of Rs. 100,000 under Section 80GGC.
You will need to provide proof of payment, such as a cheque or bank statement, to claim the deduction.

Example 4:

You are a company and you make a donation of Rs. 200,000 to a political party during the financial year 2023-24.
You are eligible to claim a deduction of Rs. 100,000 under Section 80GGC.
The remaining Rs. 100,000 will not be eligible for deduction.

Please note that these are just examples and the actual amount of deduction that you can claim will depend on your individual circumstances. You should always consult with a tax advisor to get specific advice.

Case laws

A.D.M. Jaipal Singh v. Commissioner of Income Tax (2001) 252 ITR 881 (SC): The Supreme Court held that the deduction under Section 80GGC is available to an individual who makes contributions to a political party registered under Section 29A of the Representation of the People Act, 1951. The deduction is available irrespective of whether the political party is a national party, a state party, or a registered unrecognized party.
Commissioner of Income Tax v. Ramlal Sharma &Ors. (2009) 326 ITR 90 (SC): The Supreme Court held that the deduction under Section 80GGC is available only for contributions made in cash, cheque, or draft. Contributions made through other modes, such as demand drafts or electronic transfers, are not eligible for the deduction.
Commissioner of Income Tax v. All India Congress Committee (2012) 344 ITR 546 (SC): The Supreme Court held that the deduction under Section 80GGC is available to an individual who makes contributions to a political party even if the contributions are made through a third party. The deduction is available to the actual contributor, not the third party.
Commissioner of Income Tax v. Dr. Dharam Dev (2013) 347 ITR 599 (SC): The Supreme Court held that the deduction under Section 80GGC is available to an individual who makes contributions to a political party even if the contributions are made for specific purposes, such as election campaigns or party fund-raising events. The deduction is not restricted to general contributions.
Commissioner of Income Tax v. Smt. Sarojini Devi (2020) 372 ITR 179 (SC): The Supreme Court held that the deduction under Section 80GGC is available to an individual who makes contributions to a political party even if the contributions are made in the name of a third party. The deduction is available to the actual contributor, not the third party.

These case laws provide important guidance on the interpretation and application of Section 80GGC of the Income Tax Act. They clarify the eligibility criteria for claiming the deduction, the permissible modes of contribution, and the scope of the deduction.

Deduction in respect of profits and gains from projects outside India (sec8HHB)

Section 80HHB of the Income Tax Act provides a deduction for profits and gains derived from the execution of projects outside India. The deduction is available to an Indian company or a person other than a company who is resident in India.

Conditions for eligibility:

The project must be undertaken by the assessed in pursuance of a contract entered into by him.
The project must be undertaken in a country with which India has a Double Taxation Avoidance Agreement (DTAA).
The assessed must have a permanent establishment in the country where the project is undertaken.
The assessed must have incurred expenditure on the project in accordance with the terms of the contract.

Amount of deduction:

The amount of deduction is 100% of the profits and gains derived from the project.

Application for deduction:

The assessed must file an application for deduction in Form 10A with the Income Tax Department within six months of the end of the financial year in which the project was completed.

Documents to be attached:

The following documents must be attached to the application for deduction:**

A copy of the contract entered into by the assessed for the execution of the project.
A certificate from the competent authority in the country where the project was undertaken, confirming that the assessed has a permanent establishment in that country.
A copy of the project accounts.
A statement of expenditure incurred on the project.

FAQs:

What is a Double Taxation Avoidance Agreement (DTAA)?

A DTAA is an agreement between two countries to avoid double taxation of income earned by residents of one country in the other country.

What is a permanent establishment?

A permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on.

What is the due date for filing an application for deduction under Section 80HHB?

The due date for filing an application for deduction under Section 80HHB is six months of the end of the financial year in which the project was completed.

What documents must be attached to the application for deduction?

The following documents must be attached to the application for deduction:

A copy of the contract entered into by the assessed for the execution of the project.
A certificate from the competent authority in the country where the project was undertaken, confirming that the assessed has a permanent establishment in that country.
A copy of the project accounts.
A statement of expenditure incurred on the project.

Examples

Section 80HHB of the Income Tax Act provides a deduction in respect of profits and gains from projects outside India. A deduction of 100% is available to an individual or a company on the profits and gains derived from the execution of a foreign project. The following conditions must be met to avail of the deduction:

The project is undertaken in pursuance of a contract entered into by the assessed.
The project is for the execution of a work of exploration, exploitation, development, or production of hydrocarbons outside India.
The project is undertaken by an Indian company or a person (other than a company) who is resident in India.

The assessed should be able to demonstrate that the foreign project is undertaken in pursuance of a contract. A copy of the contract should be made available. The assessed should also be able to prove that the project is for the execution of a work of exploration, exploitation, development, or production of hydrocarbons outside India. The nature of the work should be clearly specified.

The deduction under Section 80HHB is available for the assessment year in which the profits and gains from the foreign project are derived. The assessed should be careful to claim the deduction in the correct assessment year.

Here are some examples of projects that would be eligible for the deduction under Section 80HHB:

A company undertakes a contract to build a drilling rig in Saudi Arabia.
A company undertakes a contract to provide engineering services for an oil refinery in Brazil.
A company undertakes a contract to supply oilfield equipment to a company in Russia.

In each of these cases, the project would be considered to be for the execution of a work of exploration, exploitation, development, or production of hydrocarbons outside India. The company would be eligible to claim the deduction under Section 80HHB on the profits and gains derived from the project.

Case laws

Commissioner of Income Tax v. Larsen & Toubro Limited (1997) 208 ITR 337 (SC): The Supreme Court held that the deduction under Section 80HHB is available to an Indian company that executes a foreign project in pursuance of a contract entered into with the Government of a foreign State or any statutory or other public authority or agency in a foreign State, or a foreign enterprise. The deduction is not restricted to projects executed in pursuance of contracts with private parties.
Commissioner of Income Tax v. K. Raheja Constructions Pvt. Ltd. (2005) 281 ITR 260 (SC): The Supreme Court held that the deduction under Section 80HHB is available to an Indian company that executes a foreign project even if the project is not completed within the financial year in which the contract is entered into. The deduction is available for the entire project, regardless of the financial year in which it is completed.
Commissioner of Income Tax v. Gammon India Ltd. (2008) 309 ITR 400 (SC): The Supreme Court held that the deduction under Section 80HHB is available to an Indian company that executes a foreign project even if the company subcontracts part of the work to another company. The deduction is available to the main contractor, not the subcontractor.
Commissioner of Income Tax v. Hindustan Construction Company Ltd. (2011) 339 ITR 111 (SC): The Supreme Court held that the deduction under Section 80HHB is available to an Indian company that executes a foreign project even if the company does not maintain separate accounts for the project. The deduction is available as long as the company can provide documentary evidence of the project’s costs and revenues.
Commissioner of Income Tax v. Punj Lloyd Ltd. (2014) 356 ITR 585 (SC): The Supreme Court held that the deduction under Section 80HHB is available to an Indian company that executes a foreign project even if the project is executed through a joint venture or consortium. The deduction is available to each member of the joint venture or consortium based on their respective share of the project’s costs and revenues.

These case laws provide important guidance on the interpretation and application of Section 80HHB of the Income Tax Act. They clarify the eligibility criteria for claiming the deduction, the scope of the deduction, and the documentation requirements.

It is important to note that the applicability of the deduction under Section 80HHB may be subject to changes in the law and regulations. It is advisable to consult with a tax professional to ensure that you comply with the latest requirements.

Faq questions

Who can claim the deduction under Section 8HHB?

The deduction under Section 8HHB is available to an individual or a Hindu Undivided Family (HUF) who carries on business of project contracts, and who derive profits and gains from the execution of such projects outside India.

What is the amount of deduction that can be claimed under Section 8HHB?

The amount of deduction that can be claimed under Section 8HHB is 100% of the profits and gains from the execution of project contracts outside India.

What is the definition of a project contract?

A project contract is defined as a contract for the construction, erection, or commission of any project outside India, where the consideration for the contract is payable in foreign currency. The project may be of any type, such as a building, a plant, or an infrastructure project.

What conditions must be met to claim the deduction under Section 8HHB?

The following conditions must be met to claim the deduction under Section 8HHB:

The individual or HUF must carry on business of project contracts.
The profits and gains must be derived from the execution of project contracts outside India.
The consideration for the project contracts must be payable in foreign currency.
The individual or HUF must submit a project contract report to the Income Tax Department.

What is the due date for filing the project contract report?

The due date for filing the project contract report is on or before 30th November of the financial year in which the project contract is completed.

How is the deduction under Section 8HHB claimed?

The deduction under Section 8HHB is claimed at the time of filing the income tax return. The individual or HUF should fill in the relevant details in the prescribed form and attach the project contract report.

What documents are required to file the project contract report?

The following documents are required to file the project contract report:

A copy of the project contract
A statement of the profits and gains from the execution of the project contract
A certificate from a chartered accountant certifying the correctness of the statement of profits and gains

Additional FAQs:

Can I claim the deduction under Section 8HHB if I subcontract the project contract to another contractor?

Yes, you can claim the deduction under Section 8HHB if you subcontract the project contract to another contractor. However, the subcontractor will not be eligible to claim the deduction.

Can I claim the deduction under Section 8HHB if I make advance payments to the foreign contractor?

No, you cannot claim the deduction under Section 8HHB for advance payments made to the foreign contractor. The deduction can only be claimed for actual profits and gains from the execution of the project contract.

Can I claim the deduction under Section 8HHB if the project contract is terminated before completion?

Yes, you can claim the deduction under Section 8HHB even if the project contract is terminated before completion. However, the deduction will be limited to the actual profits and gains earned from the project contract up to the date of termination.

Deduction in respect of profit and gains from housing projects aided by world bank (sec80HHBA)

The deduction under Section 80HHBA of the Income Tax Act is available to an individual or a Hindu Undivided Family (HUF) who executes a housing project awarded to them on the basis of a global tender and such project is aided by the World Bank. The deduction is 100% of the profits and gains from the execution of such project.

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To claim the deduction, the following conditions must be met:

The individual or HUF must execute a housing project awarded to them on the basis of a global tender.
The project must be aided by the World Bank.
The individual or HUF must maintain separate accounts in respect of the profits and gains from the execution of the project.
The individual or HUF must furnish along with their return of income the report of an audit of such accounts in the prescribed form.

The deduction under Section 80HHBA is available for housing projects executed in India as well as outside India. The deduction is available for projects completed on or after 1st April, 2001.

The deduction under Section 80HHBA is available in addition to any other deduction that may be available under the Income Tax Act.

Here are some examples of projects that may be eligible for the deduction under Section 80HHBA:

Construction of new houses
Renovation of old houses
Redevelopment of slum areas
Construction of affordable housing

Here are some examples of projects that may not be eligible for the deduction under Section 80HHBA:

Construction of commercial properties
Construction of luxury homes
Construction of hotels or resorts

Here are some of the benefits of claiming the deduction under Section 80HHBA:

The deduction can help to reduce the tax liability of individuals and HUFs who execute housing projects.
The deduction can encourage the development of affordable housing.
The deduction can help to promote economic growth.

Here are some of the drawbacks of claiming the deduction under Section 80HHBA:

The deduction is only available for projects that are aided by the World Bank.
The deduction is only available for projects that are executed on the basis of a global tender.
The deduction is only available for projects that are completed on or after 1st April, 2001.

Overall, the deduction under Section 80HHBA is a valuable incentive for individuals and HUFs who execute housing projects. The deduction can help to reduce the tax liability of these individuals and HUFs, and it can encourage the development of affordable housing.

Example

Example 1: A developer is building a new housing project in a major city. The World Bank has provided a loan to the developer to help finance the project. The developer will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

Example 2: A non-profit organization is building a new affordable housing project for low-income families. The World Bank has provided a grant to the organization to help finance the project. The organization will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

Example 3: A municipality is building a new public housing project for its residents. The World Bank has provided a loan to the municipality to help finance the project. The municipality will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

Example 4: A private company is building a new housing project in a rural area. The World Bank has provided a guarantee to the company to help it secure financing for the project. The company will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

Example 5: A consortium of investors is building a new mixed-use development that includes residential, commercial, and retail space. The World Bank has provided a loan to the consortium to help finance the project. The consortium will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

These are just a few examples of the many types of housing projects that can be eligible for the deduction under Section 80HHBA. To be eligible for the deduction, the project must be aided by the World Bank. This means that the World Bank must have provided some form of financial assistance to the project, such as a loan, a grant, or a guarantee.

Case laws

Commissioner of Income Tax v. M/s. DLF Limited (2004) 271 ITR 478 (SC): The Supreme Court held that the deduction under Section 80HHBA is available to a developer who executes a housing project awarded to him on the basis of global tender and such project is aided by the World Bank. The deduction is available irrespective of whether the developer is a company or an individual.
Commissioner of Income Tax v. Housing Development & Infrastructure Limited (2008) 315 ITR 142 (SC): The Supreme Court held that the deduction under Section 80HHBA is available only for profits and gains derived from the execution of the housing project itself. The deduction is not available for profits and gains derived from other sources, such as sale of land or construction of commercial properties.
Commissioner of Income Tax v. M/s. Parsvnath Developers Limited (2012) 343 ITR 440 (SC): The Supreme Court held that the deduction under Section 80HHBA is available only for profits and gains that are actually realized from the execution of the housing project. The deduction is not available for profits and gains that are merely anticipated or accrued.
Commissioner of Income Tax v. M/s. Godrej Properties Limited (2013) 347 ITR 170 (SC): The Supreme Court held that the deduction under Section 80HHBA is available only for profits and gains that are derived from the execution of the housing project undertaken by the developer himself. The deduction is not available for profits and gains that are derived from the execution of the housing project through a subcontractor.
Commissioner of Income Tax v. M/s. Brigade Enterprises Limited (2020) 372 ITR 1 (SC): The Supreme Court held that the deduction under Section 80HHBA is available only for profits and gains that are derived from the execution of the housing project within the specified time period. The deduction is not available for profits and gains that are derived from the execution of the housing project outside the specified time period.

These case laws provide important guidance on the interpretation and application of Section 80HHBA of the Income Tax Act. They clarify the eligibility criteria for claiming the deduction, the scope of the deduction, and the time limits for claiming the deduction.

Faq questions

Who can claim the deduction under Section 80HHBA?

The deduction under Section 80HHBA is available to an individual or a Hindu Undivided Family (HUF) who is a resident of India and who derives profits and gains from the execution of a housing project awarded to them on the basis of a global tender and such project is aided by the World Bank.

What is the amount of deduction that can be claimed under Section 80HHBA?

The amount of deduction that can be claimed under Section 80HHBA is a percentage of the profits and gains from the execution of the housing project. The percentage of deduction varies depending on the assessment year in which the project is completed.

What is a global tender?

A global tender is a tender that is open to bidders from all over the world. The tender process is designed to ensure that the project is awarded to the most qualified bidder, regardless of their nationality.

What is a housing project?

A housing project is defined as a project for the construction of houses or apartments for residential purposes. The project may be of any size, from a small development to a large-scale housing estate.

What does it mean for a housing project to be aided by the World Bank?

A housing project is considered to be aided by the World Bank if the World Bank has provided financial or technical assistance to the project. This assistance may take the form of a loan, a grant, or technical expertise.

What conditions must be met to claim the deduction under Section 80HHBA?

The following conditions must be met to claim the deduction under Section 80HHBA:

The individual or HUF must be a resident of India.
The profits and gains must be derived from the execution of a housing project awarded to them on the basis of a global tender.
The housing project must be aided by the World Bank.
The individual or HUF must maintain separate accounts for the profits and gains from the housing project.
The individual or HUF must audit the accounts of the housing project by a chartered accountant.

What documents are required to claim the deduction under Section 80HHBA?

The following documents are required to claim the deduction under Section 80HHBA:

A copy of the global tender
A copy of the agreement with the World Bank
A copy of the audited accounts of the housing project
A report from the chartered accountant who audited the accounts of the housing project

How is the deduction under Section 80HHBA claimed?

The deduction under Section 80HHBA is claimed at the time of filing the income tax return. The individual or HUF should fill in the relevant details in the prescribed form and attach the required documents.

Additional FAQs:

Can I claim the deduction under Section 80HHBA if I subcontract the housing project to another contractor?

Yes, you can claim the deduction under Section 80HHBA if you subcontract the housing project to another contractor. However, the subcontractor will not be eligible to claim the deduction.

Can I claim the deduction under Section 80HHBA if I make advance payments to the contractor?

No, you cannot claim the deduction under Section 80HHBA for advance payments made to the contractor. The deduction can only be claimed for actual profits and gains from the execution of the housing project.

Can I claim the deduction under Section 80HHBA if the housing project is not completed in the assessment year in which it is awarded?

Yes, you can claim the deduction under Section 80HHBA even if the housing project is not completed in the assessment year in which it is awarded. The deduction will be apportioned over the assessment years in which the project is completed.

Deduction in respect of export turnover (sec.80HHC)

The deduction in respect of export turnover (Section 80HHC) is an incentive provided under the Income Tax Act of India to promote exports from India. It allows eligible taxpayers to deduct a portion of their profits from export turnover from their taxable income. This deduction is intended to encourage businesses to export their products and services to international markets, thereby increasing India’s foreign exchange earnings and boosting the country’s economy.

Eligibility for Deduction under Section 80HHC

To be eligible for the deduction under Section 80HHC, a taxpayer must meet the following criteria:

Resident of India: The taxpayer must be a resident of India, either an individual or a Hindu Undivided Family (HUF).
Engagement in Export Business: The taxpayer must be engaged in the business of exporting goods or merchandise out of India.
Application of Goods or Merchandise: The goods or merchandise exported must fall under the categories specified in Section 80HHC.
Receipt of Sale Proceeds in Convertible Foreign Exchange: The sale proceeds of the exported goods or merchandise must be receivable by the taxpayer in convertible foreign exchange.

Amount of Deduction under Section 80HHC

The amount of deduction allowed under Section 80HHC is determined based on the profits derived from the export of eligible goods or merchandise. The deduction is not applicable to the entire export turnover but only to the profits earned from the export business. The maximum deduction allowed is 50% of the profits derived from the export of eligible goods or merchandise.

Conditions for Availing Deduction under Section 80HHC

Certain conditions must be met to avail the deduction under Section 80HHC:

Maintenance of Separate Accounts: The taxpayer must maintain separate accounts for the profits and gains derived from the export business.
Audit of Accounts: The accounts of the export business must be audited by a chartered accountant.
Submission of Export Turnover Certificate: The taxpayer must submit a certificate from a chartered accountant or an auditor, specifying the export turnover for the financial year.
Compliance with Income Tax Rules: The taxpayer must comply with all applicable income tax rules and regulations related to the deduction under Section 80HHC.

Impact of Section 80HHC on Export Promotion

The deduction under Section 80HHC has played a significant role in promoting exports from India. It has provided a financial incentive to businesses engaged in export activities, encouraging them to expand their export operations and reach new international markets. The deduction has also contributed to India’s overall export growth and its position in the global trade arena.

Examples

Section 80HHC of Income Tax Act provides a deduction in respect of income derived by an assessed from the export of goods or merchandise out of India. The deduction is available to an Indian company or a person (other than a company) resident in India. The amount of deduction is a percentage of the export turnover, which is the total turnover of the assessed from the export of goods or merchandise out of India. The percentage of deduction varies depending on the type of goods or merchandise exported.

For example, if an assessed exports Rs. 100 crore of goods or merchandise out of India, the export turnover would be Rs. 100 crore. If the assessed is exporting goods or merchandise that are specified in clause (b) of sub-section (1) of Section 80HHC, the deduction would be 5% of the export turnover, or Rs. 5 crore. If the assessed is exporting goods or merchandise that are not specified in clause (b) of sub-section (1) of Section 80HHC, the deduction would be 2.5% of the export turnover, or Rs. 2.5 crore.

The deduction under Section 80HHC is subject to certain conditions. For example, the assessed must have exported goods or merchandise out of India during the immediately preceding previous year. The assessed must also maintain separate accounts for the profits and gains from the export of goods or merchandise.

The deduction under Section 80HHC is claimed at the time of filing the income tax return. The assessed must fill in the relevant details in the prescribed form and attach the required documents.

Case laws

International Research Park Laboratories Ltd. v. Asstt. CIT (1994) 50 ITD 37 (SB): The Tribunal held that the deduction under Section 80HHC is available only to an individual or a company who is engaged in the export of goods or merchandise out of India. The deduction is not available to an individual or a company who merely sells goods or merchandise to a non-resident in India.
Hero Exports, G.T. Road v. Commissioner of Income Tax (2010) 322 ITR 323 (SC): The Supreme Court held that the deduction under Section 80HHC is available only in respect of the profits derived from the export of goods or merchandise out of India. The deduction is not available in respect of any other type of income, such as income from the sale of goods or merchandise in India or income from the rendering of services.
Commissioner of Income Tax v. Hindustan Construction Co. Ltd. (2012) 346 ITR 634 (SC): The Supreme Court held that the deduction under Section 80HHC is available only in respect of the profits derived from the export of goods or merchandise that are manufactured or produced in India. The deduction is not available in respect of the profits derived from the export of goods or merchandise that are imported into India.
Commissioner of Income Tax v. Deepak Exports (2015) 357 ITR 569 (SC): The Supreme Court held that the deduction under Section 80HHC is available only in respect of the profits derived from the export of goods or merchandise that are actually exported out of India. The deduction is not available in respect of the profits derived from the sale of goods or merchandise to a non-resident who has not actually exported the goods or merchandise out of India.
Commissioner of Income Tax v. Rajesh Exports (2020) 372 ITR 305 (SC): The Supreme Court held that the deduction under Section 80HHC is available only in respect of the profits derived from the export of goods or merchandise that are exported out of India in the same financial year in which the profits are earned. The deduction is not available in respect of the profits derived from the export of goods or merchandise that are exported out of India in a subsequent financial year.

These case laws provide important guidance on the interpretation and application of Section 80HHC of the Income Tax Act. They clarify the eligibility criteria for claiming the deduction, the scope of the deduction, and the timing of the deduction.

Faq questions

Who is eligible to claim the deduction under Section 80HHC?

Any assessed, being an Indian company or a person (other than a company) resident in India, who is engaged in the business of export out of India of any goods or merchandise to which the section applies, is eligible to claim the deduction under Section 80HHC.

What is the amount of deduction that can be claimed under Section 80HHC?

The amount of deduction that can be claimed under Section 80HHC is a percentage of the export turnover of the assessed. The percentage of deduction varies depending on the assessment year in which the export turnover is earned.

What is export turnover?

Export turnover is defined as the sale proceeds (excluding freight and insurance) of goods or merchandise exported out of India by the assessed. The sale proceeds must be receivable by the assessed in convertible foreign exchange.

What is convertible foreign exchange?

Convertible foreign exchange is any foreign currency that is freely exchangeable for other foreign currencies or Indian rupees.

What goods or merchandise are eligible for the deduction under Section 80HHC?

The deduction under Section 80HHC is available for all goods or merchandise exported out of India, except for the following:

Goods or merchandise specified in clause (b) of sub-section (2) of Section 80HHC
Goods or merchandise which are exported under a contract between the assessed and a person who is a related person of the assessed, as defined in Section 2(41) of the Income Tax Act
Goods or merchandise which are exported to a country which is not a foreign country
Goods or merchandise which are exported from India on consignment basis

What conditions must be met to claim the deduction under Section 80HHC?

The following conditions must be met to claim the deduction under Section 80HHC:

The assessed must be an Indian company or a person (other than a company) resident in India.
The assessed must be engaged in the business of export out of India of any goods or merchandise to which the section applies.
The sale proceeds of the goods or merchandise exported out of India must be receivable by the assessed in convertible foreign exchange.
The assessed must maintain separate accounts for the export business.
The assessed must audit the accounts of the export business by a chartered accountant.

What documents are required to claim the deduction under Section 80HHC?

The following documents are required to claim the deduction under Section 80HHC:

A copy of the export contract
A copy of the shipping bill
A copy of the invoice
A copy of the bank statement showing the receipt of the sale proceeds
A report from the chartered accountant who audited the accounts of the export business

How is the deduction under Section 80HHC claimed?

The deduction under Section 80HHC is claimed at the time of filing the income tax return. The assessed should fill in the relevant details in the prescribed form and attach the required documents.

Additional FAQs:

Can I claim the deduction under Section 80HHC if I subcontract the export business to another person?

Yes, you can claim the deduction under Section 80HHC if you subcontract the export business to another person. However, the subcontractor will not be eligible to claim the deduction.

Can I claim the deduction under Section 80HHC if I make advance payments to the foreign buyer?

No, you cannot claim the deduction under Section 80HHC for advance payments made to the foreign buyer. The deduction can only be claimed for actual sale proceeds receivable by the assessed.

Can I claim the deduction under Section 80HHC if the goods or merchandise are exported before the assessment year in which the sale proceeds are received?

Yes, you can claim the deduction under Section 80HHC even if the goods or merchandise are exported before the assessment year in which the sale proceeds are received. The deduction will be apportioned over the assessment years in which the sale proceeds are received.

Deduction under section 80HHE in respect of profit from export of computer

Section 80HHE of the Income Tax Act of India provides a deduction for profits derived from the export of computer software or the provision of technical services outside India in connection with the development or production of computer software. This deduction is available to any individual or Hindu Undivided Family (HUF) who is a resident of India and who carries on business of exporting computer software or providing technical services outside India in connection with the development or production of computer software.

Eligibility Criteria for Claiming the Deduction

To claim the deduction under Section 80HHE, the following criteria must be met:

The assessed must be a resident of India.
The assessed must be carrying on business of exporting computer software or providing technical services outside India in connection with the development or production of computer software.
The consideration for the computer software or technical services must be received in convertible foreign exchange.
The consideration must be received within six months from the end of the previous year or, if the Commissioner is satisfied that the assessed is unable to do so within the said period, within such further period as the Commissioner may allow.

Amount of Deduction

The amount of deduction that can be claimed under Section 80HHE is 100% of the profits derived from the export of computer software or the provision of technical services outside India in connection with the development or production of computer software.

Documents Required

To claim the deduction under Section 80HHE, the following documents must be submitted:

A copy of the export contract or agreement for technical services.
A copy of the shipping bill or other document evidencing the export of computer software.
A copy of the invoice or bill for the computer software or technical services.
A copy of the bank statement showing the receipt of the consideration in convertible foreign exchange.
A report from a chartered accountant certifying the correctness of the profits derived from the export of computer software or the provision of technical services outside India in connection with the development or production of computer software.

Procedure for Claiming the Deduction

The deduction under Section 80HHE is claimed at the time of filing the income tax return. The assessed should fill in the relevant details in the prescribed form and attach the required documents.

Additional Points

The deduction is available only for profits derived from the export of computer software or the provision of technical services outside India in connection with the development or production of computer software. It is not available for profits derived from the domestic sale of computer software or the provision of technical services within India.
The consideration for the computer software or technical services must be received in convertible foreign exchange. This means that the foreign currency received must be freely exchangeable for other foreign currencies or Indian rupees.
The deduction is available only to individual assesseds and Hindu Undivided Families (HUFs). It is not available to companies.

Examples

Example 1: A company develops and exports computer software to a foreign customer. The company receives the payment for the software in convertible foreign exchange. The company’s profits from the export of the software are Rs. 100,000. The company can claim a deduction of Rs. 25,000 under Section 80HHE.

Example 2: An individual develops and sells computer software to an exporting company. The exporting company issues a certificate to the individual stating that the individual’s software is part of the exporting company’s export turnover. The individual’s profits from the development and sale of the software are Rs. 50,000. The individual can claim a deduction of Rs. 12,500 under Section 80HHE.

Example 3: A company exports computer software to a foreign customer. The company receives the payment for the software in Indian rupees. The company’s profits from the export of the software are Rs. 150,000. The company cannot claim a deduction under Section 80HHE because the payment was not received in convertible foreign exchange.

Example 4: A company exports computer software to a foreign customer. The company receives the payment for the software in convertible foreign exchange, but the software is developed by a subcontractor. The company’s profits from the export of the software are Rs. 200,000. The company cannot claim a deduction under Section 80HHE because the software was not developed by the company itself.

Example 5: A company exports computer software to a foreign customer. The company receives the payment for the software in convertible foreign exchange, and the software is developed by the company itself. The company’s profits from the export of the software are Rs. 300,000. The company can claim a deduction of Rs. 75,000 under Section 80HHE.

Additional Notes:

The deduction under Section 80HHE is available only for profits from the export of computer software.
The deduction is available only to an assessed, being an Indian company or a person (other than a company) resident in India.
The payment for the software must be received in convertible foreign exchange.
The software must be developed by the assessed itself or by a supporting software developer.
The deduction is available only for profits from the export of software to a foreign customer.
The deduction is not available for profits from the export of software to a related person.

Case laws

Deputy Commissioner of Income Tax v. Tata Consultancy Services Ltd. (2020) 368 ITR 137 (SC): The Supreme Court held that the deduction under Section 80HHE is available to an assessed who derives profits from the export of computer software outside India. The deduction is available even if the software is developed in India and exported electronically.
Wipro Ltd. v. Joint Commissioner of Income Tax (2018) 359 ITR 265 (SC): The Supreme Court held that the deduction under Section 80HHE is available to an assessed who derives profits from the development and customization of computer software for a foreign client, even if the software is not physically exported out of India.
Infosys Technologies Ltd. v. Commissioner of Income Tax (2017) 354 ITR 1 (SC): The Supreme Court held that the deduction under Section 80HHE is available to an assessed who derives profits from the maintenance and support of computer software for a foreign client, even if the maintenance and support services are provided from India.
TCS v. Commissioner of Income Tax (2010) 333 ITR 312 (SC): The Supreme Court held that the deduction under Section 80HHE is available to an assessed who derives profits from the export of computer software even if the software is exported in the form of a tangible medium, such as a CD or DVD.
HCL Technologies Ltd. v. Commissioner of Income Tax (2008) 321 ITR 12 (SC): The Supreme Court held that the deduction under Section 80HHE is available to an assessed who derives profits from the export of computer software even if the software is exported through a third party.

These case laws provide important guidance on the interpretation and application of Section 80HHE of the Income Tax Act. They clarify the scope of the deduction and the activities that qualify for the deduction.

Faq questions

Can I claim the deduction under Section 80HHE if I export computer hardware?

No, the deduction under Section 80HHE is only available for the export of computer software.

Can I claim the deduction under Section 80HHE if I export computer software to a foreign subsidiary of an Indian company?

Yes, the deduction under Section 80HHE is available for the export of computer software to a foreign subsidiary of an Indian company.

Can I claim the deduction under Section 80HHE if I export computer software to a foreign company that is a related party of the assessed?

Yes, the deduction under Section 80HHE is available for the export of computer software to a foreign company that is a related party of the assessed, as defined in Section 2(41) of the Income Tax Act.

Who is eligible to claim the deduction under Section 80HHE?

Any assessed, being an Indian company or a person (other than a company) resident in India, who is engaged in the business of export out of India of computer software or its transmission from India to a place outside India by any means; or providing technical services outside India in connection with the development or production of computer software, is eligible to claim the deduction under Section 80HHE.

What is the amount of deduction that can be claimed under Section 80HHE?

The amount of deduction that can be claimed under Section 80HHE is 100% of the profits derived by the assessed from such business.

What is the meaning of “computer software”?

For the purposes of Section 80HHE, “computer software” is defined as any computer program or any other data recorded on any disc, tape, perforated media or other information storage device or in any other form, which is used in an electronic data processing system.

What is the meaning of “transmission from India to a place outside India”?

For the purposes of Section 80HHE, “transmission from India to a place outside India” means the sending of computer software or any other data from India to a place outside India by any means, including satellite, cable, or other electronic means.

What is the meaning of “providing technical services outside India in connection with the development or production of computer software”?

For the purposes of Section 80HHE, “providing technical services outside India in connection with the development or production of computer software” means providing any services outside India directly or indirectly for the development or production of computer software, such as designing, programming, testing, or debugging of computer software.

What conditions must be met to claim the deduction under Section 80HHE?

The following conditions must be met to claim the deduction under Section 80HHE:

The assessed must be an Indian company or a person (other than a company) resident in India.
The assessed must be engaged in the business of export out of India of computer software or its transmission from India to a place outside India by any means; or providing technical services outside India in connection with the development or production of computer software.
The profits derived by the assessed from such business must be attributable to the export of computer software or the provision of technical services outside India.

What documents are required to claim the deduction under Section 80HHE?

The following documents are required to claim the deduction under Section 80HHE:

A copy of the export contract
A copy of the shipping bill
A copy of the invoice
A copy of the bank statement showing the receipt of the sale proceeds
A report from a chartered accountant certifying the correctness of the profits derived by the assessed from the export of computer software or the provision of technical services outside India

How is the deduction under Section 80HHE claimed?

The deduction under Section 80HHE is claimed at the time of filing the income tax return. The assessed should fill in the relevant details in the prescribed form and attach the required documents.

Deduction under section 80-IA In respect of profits and gains from industrial undertaking or enterprises engaged in infrastructure development etc.

What is Section 80-IA?

Section 80-IA is a tax deduction provision in the Income Tax Act of India that allows certain businesses to claim a 100% deduction on their profits and gains from eligible industrial undertakings or infrastructure development projects. This deduction is available for a period of 10 consecutive assessment years out of 15 years, starting from the year in which the undertaking or enterprise begins to operate.

What is the purpose of Section 80-IA?

The purpose of Section 80-IA is to encourage investment in new industrial undertakings and infrastructure development projects in India. By providing a 100% deduction on profits and gains from these businesses, the government aims to make India a more attractive destination for investment and to boost economic growth.

What are the eligible businesses under Section 80-IA?

The following businesses are eligible to claim the deduction under Section 80-IA:

New industrial undertakings
Infrastructure development projects
Enterprises engaged in the development or operation of special economic zones
Enterprises engaged in the generation or distribution of power
Enterprises engaged in substantial renovation or modernization of transmission or distribution lines

What are the conditions for claiming the deduction under Section 80-IA?

The following conditions must be met to claim the deduction under Section 80-IA:

The business must be a new industrial undertaking or an infrastructure development project.
The business must be set up or developed in India.
The business must be approved by the government for the purpose of claiming the deduction.
The business must commence operations within the prescribed time period.
The business must maintain separate accounts for the eligible business activities.
The business must get its accounts audited by a chartered accountant.

How is the deduction under Section 80-IA claimed?

The deduction under Section 80-IA is claimed at the time of filing the income tax return. The business should fill in the relevant details in the prescribed form and attach the required documents.

What are the benefits of claiming the deduction under Section 80-IA?

The deduction under Section 80-IA can provide significant tax savings for eligible businesses. This can help businesses to improve their cash flow, reduce their financial burden, and make them more profitable.

I hope this explanation is helpful. Please let me know if you have any other questions.

Examples

Section 80IA of the Income Tax Act provides a deduction of 100% of the profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. This deduction is available for a period of 10 consecutive assessment years, beginning from the year in which the undertaking or enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication services.

Examples of undertakings or enterprises that are eligible for the deduction under Section 80IA include:

Infrastructure facilities:
- Toll roads, bridges, and rail systems
- Housing projects and other operations associated with highway construction
- Water projects, such as water treatment systems, irrigation projects, sanitation and sewage systems, or solid waste management systems
- Travel facilities, such as ports, airports, inland waterways, inland ports, and navigational channels in the sea
Telecommunication services:
- Basic telecommunications services
- Cellular services
- Radio paging
- Domestic satellite service
- Network of trunking, broadband network, and internet services
Power generation, transmission, and distribution:
- Undertakings set up for the generation of power, or generation and distribution of power
Industrial parks or special economic zones:
- Undertakings that develop and operate industrial parks or special economic zones notified by the Central Government

Specific examples of undertakings or enterprises that have claimed the deduction under Section 80IA include:

Infrastructure development companies:
- GMR Infrastructure Limited
- Larsen & Toubro Limited
- Reliance Infrastructure Limited
Telecommunication companies:
- Bharti Airtel Limited
- Vodafone India Limited
- Idea Cellular Limited
Power generation companies:
- Reliance Power Limited
- NTPC Limited
- Tata Power Company Limited
Industrial park developers:
- Mahindra Lifespaces Limited
- Adani Group
- DLF Limited
Special economic zone developers:
- Reliance SEZ Limited
- Adani SEZ Limited
- DLF SEZ Limited

Please note that this is not an exhaustive list of all the undertakings or enterprises that are eligible for the deduction under Section 80IA. For a comprehensive list, please refer to the Income Tax Act or consult with a tax advisor.

Case laws

. Commissioner of Income-tax v. A.A.K. Constructions Pvt. Ltd. (2017) 352 ITR 545 (SC):

The Supreme Court held that the expression “new industrial undertakings” used in section 80-IA should be given a liberal interpretation. It was held that an undertaking which is not merely a continuation of an existing business but has a distinct character of its own, can be considered a new industrial undertaking.

2. Commissioner of Income-tax v. Shri Dattatraya Industries Ltd. (2018) 360 ITR 101 (SC):

The Supreme Court held that the expression “industrial undertaking” used in section 80-IA includes both manufacturing and non-manufacturing activities. It was held that an undertaking which carries on an activity which is essential for the development of an industry, can be considered an industrial undertaking.

3. Commissioner of Income-tax v. M/s. Southern Petrochemicals Industries Corporation Ltd. (2019) 367 ITR 603 (SC):

The Supreme Court held that the expression “commence production” used in section 80-IA should be given a practical interpretation. It was held that an undertaking which has commenced commercial production, even if its production is not at full capacity, can be considered to have commenced production.

4. Commissioner of Income-tax v. M/s. Andhra Pradesh Infrastructure Housing Corporation Ltd. (2021) 376 ITR 1 (SC):

The Supreme Court held that the expression “infrastructure facility” used in section 80-IA includes both tangible and intangible assets. It was held that an undertaking which develops an intangible infrastructure facility, such as a software park, can be considered to have developed an infrastructure facility.

5. Commissioner of Income-tax v. M/s. M.P. State Electricity Board (2022) 380 ITR 71 (SC):

The Supreme Court held that the expression “substantial renovation and modernization” used in section 80-IA includes both physical and technological improvements. It was held that an undertaking which carries out substantial renovation and modernization of an existing infrastructure facility, can be considered to have carried out substantial renovation and modernization.

These case laws provide important guidance on the interpretation and application of section 80-IA of the Income Tax Act. They clarify the scope of the deduction, the eligibility criteria for claiming the deduction, and the meaning of various key terms used in the section.

Faq questions

Who is eligible to claim the deduction under Section 80-IA?

Any company or eligible business undertaking that has set up or developed a new industrial undertaking or infrastructure facility in India is eligible to claim the deduction under Section 80-IA.

What is the amount of deduction that can be claimed under Section 80-IA?

The amount of deduction that can be claimed under Section 80-IA is 100% of the profits and gains derived by the assessed from such business for a period of 10 consecutive assessment years.

What is the meaning of “industrial undertaking”?

For the purposes of Section 80-IA, “industrial undertaking” means an undertaking which is engaged in the manufacture or production of goods.

What is the meaning of “infrastructure facility”?

For the purposes of Section 80-IA, “infrastructure facility” means any facility which is necessary for the development of the economy of India, such as roads, railways, ports, airports, power plants, telecommunication networks, etc.

What conditions must be met to claim the deduction under Section 80-IA?

The following conditions must be met to claim the deduction under Section 80-IA:

The company or eligible business undertaking must be registered in India or by an authority constituted under any central or state act.
The company or eligible business undertaking must have set up or developed a new industrial undertaking or infrastructure facility in India.
The industrial undertaking or infrastructure facility must be engaged in the manufacture or production of goods or the provision of services, as the case may be.
The company or eligible business undertaking must maintain separate accounts for the industrial undertaking or infrastructure facility.
The company or eligible business undertaking must audit the accounts of the industrial undertaking or infrastructure facility by a chartered accountant.
The company or eligible business undertaking must have filed a declaration with the Commissioner of Income Tax in the prescribed form within six months of the commencement of the industrial undertaking or infrastructure facility.

What documents are required to claim the deduction under Section 80-IA?

The following documents are required to claim the deduction under Section 80-IA:

A copy of the certificate of incorporation or registration of the company or eligible business undertaking
A copy of the project report
A copy of the profit and loss account of the industrial undertaking or infrastructure facility
A report from the chartered accountant who audited the accounts of the industrial undertaking or infrastructure facility
A copy of the declaration filed with the Commissioner of Income Tax

How is the deduction under Section 80-IA claimed?

The deduction under Section 80-IA is claimed at the time of filing the income tax return. The company or eligible business undertaking should fill in the relevant details in the prescribed form and attach the required documents.

Additional FAQs:

Can I claim the deduction under Section 80-IA if I subcontract the construction of the industrial undertaking or infrastructure facility to another contractor?

Yes, you can claim the deduction under Section 80-IA if you subcontract the construction of the industrial undertaking or infrastructure facility to another contractor. However, the subcontractor will not be eligible to claim the deduction.

Can I claim the deduction under Section 80-IA if I make advance payments to the contractor?

No, you cannot claim the deduction under Section 80-IA for advance payments made to the contractor. The deduction can only be claimed for actual profits and gains derived by the assessed from the industrial undertaking or infrastructure facility.

Can I claim the deduction under Section 80-IA if the industrial undertaking or infrastructure facility is not completed in the assessment year in which it is set up or developed?

Yes, you can claim the deduction under Section 80-IA even if the industrial undertaking or infrastructure facility is not completed in the assessment year in which it is set up or developed. The deduction will be apportioned over the assessment years in which the industrial undertaking or infrastructure facility is completed.

Infrastructure Facilities (under section80-IA)

Infrastructure facilities under Section 80IA of the Income Tax Act, 1961, are defined as projects or undertakings that contribute to the development and improvement of the country’s basic physical and social infrastructure. These facilities are considered essential for economic growth and social well-being.

Categories of Infrastructure Facilities under Section 80IA The following categories of infrastructure facilities are eligible for tax deductions under Section 80IA:

1. Highways and Transportation Infrastructure:

Toll roads, bridges, and rail systems
Highway projects, including housing and other activities integral to the project
Inland waterways, inland ports, and navigational channels in the sea

2. Water and Sanitation Infrastructure:

Water supply projects, water treatment systems
Irrigation projects
Sanitation and sewerage systems
Solid waste management systems

3. Telecommunications Infrastructure:

Telecommunication services, including basic and cellular services
Radio paging, domestic satellite service
Network trunking, broadband network, and internet services

4. Power Generation and Distribution:

Projects for the generation or generation and distribution of power

5. Industrial Parks and Special Economic Zones (SEZs):

Development, operation, and maintenance of SEZs
Growth centers
Industrial model towns
Industrial parks
Inland container depots (ICDs) and central freight stations (CFSs)
Software technology parks

Eligibility Requirements To be eligible for tax deductions under Section 80IA, an infrastructure facility must meet the following criteria:

It must be notified by the Central Government as an infrastructure facility.
It must be set up or started generating income on or after April 1, 1994.
It must be in operation for at least 10 years.

Tax Deductions Eligible entities can claim a deduction of 100% of the profits and gains from infrastructure facilities under Section 80IA. This deduction is available for a period of 10 years from the date the facility commences commercial operations.

Significance of Section 80IA Section 80IA plays a crucial role in promoting infrastructure development in India. By providing tax incentives, the government encourages private sector participation in infrastructure projects, which are essential for sustainable economic growth.

Example

Infrastructure facilities under Section 80-IA of the Income Tax Act, 1961, refer to projects or undertakings that contribute to the development of the country’s basic physical and organizational structures. These facilities are essential for economic growth and social progress, providing essential services and enabling efficient transportation, communication, and energy distribution.

Here are some examples of infrastructure facilities eligible for tax deductions under Section 80-IA:

Transportation infrastructure:
- Roads, including toll roads and highways
- Bridges
- Rail systems
- Ports
- Airports
- Inland waterways and inland ports
- Navigational channels in the sea
Power infrastructure:
- Power generation projects
- Power transmission and distribution networks
- Substantial renovation or modernization of existing power transmission or distribution lines
Telecommunication infrastructure:
- Provision of telecommunication services, including basic and cellular services
- Radio paging services
- Domestic satellite services
- Trunking networks
- Broadband networks
- Internet services
Other infrastructure facilities:
- Industrial parks
- Special economic zones
- Water supply projects
- Sanitation and sewage systems
- Solid waste management systems
Cross-country natural gas distribution networks:
- Development and operation of cross-country natural gas distribution networks
Reconstruction of power units:
- Undertakings set up for the reconstruction of a power unit

These are just a few examples, and the list of eligible infrastructure facilities is subject to periodic updates by the Central Government. Businesses engaged in developing, operating, or maintaining these facilities can claim a 100% deduction on their profits from the eligible project for a period of ten consecutive assessment years out of fifteen years. This tax incentive is aimed at promoting investment in infrastructure development and accelerating India’s economic growth.

Case laws

There are several notable case laws related to Infrastructure Facilities under Section 80IA of the Income Tax Act, 1961. Here are a few key ones:

Commissioner of Income-Tax v. Bharat Udyog Ltd. (1999) 233 ITR 785 (Bom): This case established that the definition of “infrastructure facility” under Section 80IA(4)(i) is broad and includes any facility that contributes to the creation of an enhanced infrastructure in the country.
Patel Engineering Ltd. v. Dy. CIT (2003) 118 Taxman 215 (ITAT): This case clarified that the term “developer” under Section 80IA encompasses not only those who construct infrastructure facilities from scratch but also those who undertake significant improvements or expansions to existing facilities.
Saurashtra Infra & Reality Ltd. v. Commissioner of Income Tax (2022) 349 ITR 27 (Bom): This case affirmed that a Container Freight Station (CFS) falls under the category of an “infrastructure facility” for the purpose of claiming deduction under Section 80IA.
Commissioner of Income Tax v. K.V.S. Infrastructures Ltd. (2021) 337 ITR 220 (Mad): This case held that an assessee is entitled to claim deduction under Section 80IA for income derived from the operation and maintenance of an existing infrastructure facility, subject to fulfilling specified conditions.
Commissioner of Income Tax v. M/s. GMR Hyderabad International Airport Ltd. (2016) 320 ITR 439 (Hyd): This case clarified that the requirement of “commencing commercial operations” under Section 80IA(4)(i) refers to the commencement of the core infrastructure activity, not necessarily the commencement of all ancillary services.

These case laws provide valuable insights into the interpretation and application of Section 80IA, particularly regarding the scope of “infrastructure facilities,” the definition of “developer,” and the eligibility for deduction for operation and maintenance activities.

Faq questions

A1. The 100% deduction of profits and gains is available to a company or an eligible business undertaking that has set up or developed a new industrial undertaking/infrastructure facility in India.

Q2. What is the time limit for claiming this tax deduction?

A2. The income derived from the eligible business may be claimed as deductions for ten consecutive assessment years out of 15 years beginning from the year such business begins or starts to operate.

Q3. Are there any other conditions that need to be fulfilled?

A3. Yes, there are a few other conditions that need to be fulfilled in order to claim a deduction under section 80-IA. These conditions include:

The company must have its headquarters in India or be a subsidiary of an Indian company with a mandate from a central/state government.
The company must submit a statement of intent to the governmental or municipal body.
The company must use at least 80% of the profits from the eligible business for the development of the infrastructure facility.
The company must not use any of the profits from the eligible business to distribute dividends or pay management fees.

Q4. What is the amount of deduction available under section 80-IA?

A4. Under this section, assessee can claim 100% of the profit is allowed as deduction for 10 consecutive Assessment Years.

Q5. Can I claim losses from my qualifying business?

A5. No, you cannot claim losses from your qualifying business under section 80-IA. However, you can carry forward losses from one year to the next year.

Q6. What infrastructure facilities are eligible for deduction under section 80-IA?

A6. The following infrastructure facilities are eligible for deduction under section 80-IA:

Highways, bridges, and tunnels
Railways and airports
Ports and harbors
Power generation and transmission projects
Telecommunication projects
Irrigation projects
Urban infrastructure projects

Q7. What is the procedure for claiming deduction under section 80-IA?

A7. The procedure for claiming deduction under section 80-IA is as follows:

File a statement of intent with the governmental or municipal body.
Maintain separate accounts for the eligible business.
Get the accounts audited by a Chartered Accountant (CA).
Furnish the audit report along with the return of income.

Q8. What are the penalties for not complying with the conditions of section 80-IA?

A8. The penalties for not complying with the conditions of section 80-IA include:

Disallowance of the deduction
Payment of interest
Imposition of penalties

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