Section 80-IA of ITA, 1961 : Section 80-Ia: Deductions In Respect Of Profits And Gains From Industrial Undertakings Or Enterprises Engaged In Infrastructure Development, Etc

Explanation using Example

Imagine a company, GreenTech Power Ltd., which has recently set up a new solar power generation facility. The company invested in the latest solar panels and began operations on 1st April 2022. Since the facility is involved in generating power, an activity eligible for tax deductions under Section 80-IA of the Income-tax Act, 1961, GreenTech Power Ltd. can claim a deduction of 100% of the profits and gains derived from this solar power generation business for ten consecutive assessment years.

GreenTech Power Ltd. decides to claim this deduction from the financial year 2022-23, which is the year they began operations. They can continue to claim this deduction for ten consecutive years, until the financial year 2031-32, provided they meet all the conditions specified in the Act, such as not being formed by splitting up or reconstruction of an existing business and not transferring to the new business any machinery or plant previously used for any purpose (unless it meets the exceptions provided).

By taking advantage of this tax deduction, GreenTech Power Ltd. can significantly reduce their tax liability, which can help them reinvest the savings into further expansion or improving their technology, contributing to the growth of sustainable energy sources in the country.