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Rashmin Sanghvi & Associates

Chartered Accountants

220, 2nd Floor, Arun Chambers,
Tardeo Road,
Mumbai - 400 034,
Maharashtra, India.

Tel. Nos.: (+91 22) 2351 1878, 2352 5694.

Fax : (+91 22) 2351 5275.

Email : [email protected]

 
Home Articles Taxation         Share :

Budget 2016 Annexure II

Annexure II

Phasing out deductions
 

The deductions given in the table below are proposed to be lowered or phased out over the next few years. The finance bill has proposed to reduce the corporate rate of tax to 25% for newly incorporated entities which are not going to claim any of the above said deductions. It is proposed to bring down the corporate rate to 25% for all corporate assesses over a period of 4 years.
 

Reduction in weighted deduction of expenditure:
 

Section

Weighted Deduction presently available (percentage of actual expenditure)

Proposed deduction (actual or percentage of actual expenditure)

35CCD – Expenditure on skill development project

150%

Actual expenditure from A.Y. 2021-22 onwards

35(1)(ii) – Expenditure on scientific research

175%

150% effective from A.Y. 2018-19 to A.Y. 2020-21

Actual expenditure from A.Y. 2021-22 onwards

35(1)(iia) – Expenditure on scientific research

125%

Actual expenditure from A.Y. 2018-19

35(1)(iii) – Expenditure on scientific research

125%

Actual from A.Y. 2018-19 onwards

35(2AA) – Expenditure on scientific research

200%

150% effective from A.Y. 2018-19 to A.Y. 2020-21

Actual expenditure from A.Y. 2021-22 onwards

35(2AB) – Expenditure on scientific research

200%

150% effective from A.Y. 2018-19 to A.Y. 2020-21

Actual expenditure from A.Y. 2021-22 onwards

35AD – Deduction in respect of specified

150%

Actual expenditure from A.Y. 2018-19 onwards

35CCC - Expenditure on notified agricultural extension projects

150%

Actual expenditure from A.Y. 2020-21 onwards


Complete Withdrawal of tax exemption:
 

Section

Deduction available presently

Proposed phase out

10AA – Special provision in respect of newly established units Special economic zones (SEZ)

Profit linked deduction for units in SEZ for profits derived from export of articles/things/services

No deduction to units commencing manufacture/production of article or thing or start of service from A.Y. 2021-22 onwards

32 read with Rule 5 – Accelerated Depreciation

100% depreciation for certain block of assets was available to certain industrial sectors

Rate of depreciation restricted to 40% effective from A.Y. 2018-19 onwards. New rate applicable from to all assets (old and new)

S. 80-IA – Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development etc.

100% profit is deductible

No deduction if specified activity commences on or after 01.04.17

S. 80-IAB - Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone

100% profit is deductible

No deduction if specified activity commences on or after 01.04.17

S. 80-IB – Deduction in respect of profits and gains from certain industrial undertaking other than infrastructure development undertakings

100% profit is deductible

No deduction if specified activity commences on or after 01.04.17