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Bye, Bye Tax Deductions?

Published on Mon, Nov 23,2015 | 23:33, Updated at Mon, Nov 23 at 23:33Source : Moneycontrol.com |   Watch Video :

Looks like it's time to say bye bye deductions? This is a move to simplify tax policy and in the long term that's an excellent thing to do. In the short term some industries will feel the pain more than others. To do that sector-wise analysis Menaka Doshi of CNBC-TV18 is joined by Manish Shah of SKP.

BYE, BYE DEDUCTIONS?
Section 32 – Depreciation           
1 Apr 2017: Rate of depreciation on assets to be reduced to 60%

MOST IMPACTED
Infrastructure companies in water supply/treatment system  
Industries manufacturing of air/water pollution control equipments
Mining
Silk industry
Flour mill industry
Iron & Steel industry
Sugar industry
Clean & Renewable energy
Professionals    

BYE, BYE DEDUCTIONS?
Section 35AD – Deduction of capital expenditure for specified business
1 Apr 2017: Weighted deduction of 150% of capital expenditure to be reduced to 100%

MOST IMPACTED
Cold chain facility
Warehouse for storage of agricultural produce
Hospitals with at least 100 beds for patients
Affordable Housing projects as notified
Production of fertilisers

BYE, BYE DEDUCTIONS?
Section 35AC – Deduction for payment towards certain schemes / projects
1 Apr 2017: 100% deduction for expenditure towards certain schemes / projects to be discontinued

MOST IMPACTED
NGOs running such schemes / projects
Companies claiming backdoor deduction for CSR activities

BYE, BYE DEDUCTIONS?
Section 35 – Expenditure on Scientific Research             
1 Apr 2017: Weighted deductions in the range of 125% - 200% to be reduced to 100%

MOST IMPACTED           
Universities, Colleges, Institutions (including IITs)
Pharmaceutical companies expending heavily on in-house scientific research
Overall scientific research activities

BYE, BYE DEDUCTIONS?
Section 80-IA(4)(i) – Deduction for profits from infrastructure facility              
1 Apr 2017: 100% deduction for profits from developing, operating and maintaining any specified infrastructure facility for 10 consecutive years to be discontinued

MOST IMPACTED
Infrastructure companies involved in following:
Road, toll road, bridge or rail system
Highway project
Water supply/treatment, irrigation, sanitation/sewerage/solid waste management  
Port, airport, inland waterway, inland port…

BYE, BYE DEDUCTIONS?
Section 80–IAB – Deduction for profits from development of Specific Economic Zone (SEZ)
1 Apr 2017: 100% deduction for profits from developing a SEZ  to be discontinued

MOST IMPACTED
Companies involved in SEZ development
SEZ sector as a whole

BYE, BYE DEDUCTIONS?
Section 10AA – Deduction for profits from export of articles / things by SEZ units
1 Apr 2017: Deduction for profits from exports by SEZ units to be discontinued

MOST IMPACTED
SEZ sector as a whole
Software and IT enabled services
Pharmaceutical companies
Gem and Jewellery
Apparel

BYE, BYE DEDUCTIONS?
Section 80-IB(9)(ii)/(iv)/(v) – Deduction for profits from commercial production of mineral oils / natural gas
1 Apr 2017: 100% deduction for profits from commercial production to be discontinued

Most impacted
Natural Gas industry players not starting commercial production before 1 April 2017

BYE, BYE DEDUCTIONS?
Section 35CCC – Deduction for expenditure on agricultural extension project
&
Section 35CCD – Deduction for expenditure towards notified skill development project

1 Apr 2017: Weighted deduction of 150% available for expenditure on such projects to be reduced to 100%
 
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