Section 80-I of ITA, 1961 : Section 80-I: Deduction In Respect Of Profits And Gains From Industrial Undertakings After A Certain Date, Etc

Explanation using Example

Imagine a company named "TechFab Innovations," which started a new industrial undertaking to manufacture eco-friendly packaging materials in 2021. The company meets all the conditions specified under Section 80-I of the Income-tax Act, 1961, such as:

• It is not formed by splitting up or reconstructing an existing business.
• It has not transferred any previously used machinery to the new business.
• It employs more than ten workers with the aid of power in its manufacturing process.

Since TechFab Innovations started its operations after April 1, 1990, and its gross total income includes profits from this new industrial undertaking, it is eligible for a deduction of 25% of such profits for a company, as per sub-section (1A) of Section 80-I.

For the assessment year 2022-2023, let's say TechFab Innovations made a profit of INR 10 million from this new undertaking. Therefore, they can claim a deduction of INR 2.5 million (25% of INR 10 million) when computing their total taxable income.

This deduction can be claimed for a total of nine assessment years starting from the year in which the undertaking began manufacturing. It is important to note that the company must maintain proper books of accounts and get them audited by a certified accountant, as required by sub-section (7) of Section 80-I.