Accelerated Depreciation/Weighted Deduction under Income Tax Act

1. Section 32 read with rule 5 of Income-tax Rules, 1962

Incentive Currently Available under the Act

Accelerated depreciation is provided to certain Industrial sectors in order to give impetus for investment. The depreciation under the Income-tax Act is available up to 100% in respect of certain block of assets.

Proposed phase out measures/ Amendment

To amend the new Appendix IA read with rule 5 of Income-tax Rules, 1962 to provide that highest rate of depreciation under the Income-tax Act shall be restricted to 40% w.e.f 01.4.2017. (i.e from previous year 2017-18 and subsequent years). The new rate is proposed to be made applicable to all the assets (whether old or new) falling in the relevant block of assets.

.

2. 35(1)(ii)- Expenditure on scientific research

Incentive Currently Available under the Act

Weighted deduction from the business income to the extent of 175 per cent of any sum paid to an approved scientific research association which has the object of undertaking scientific research. Similar deduction is also available if a sum is paid to an approved university, college or other institution and if such sum is used for scientific research.

Proposed phase out measures/ Amendment

Weighted deduction shall be restricted to 150 per cent from 01.04.2017 to 31.03.2020 (i.e. from previous year 2017-18 to previous year 2019-20) and deduction shall be restricted to 100 per cent from 01.04.2020 (i.e. from previous year 2020-21 onwards).

.

3. 35(1)(iia)- Expenditure on scientific research

Incentive Currently Available under the Act

Weighted deduction from the business income to the extent of 125 per cent of any sum paid as contribution to an approved scientific research company.

Proposed phase out measures/ Amendment

Deduction shall be restricted to 100 per cent with effect from 01.04.2017 (i.e. from previous year 2017-18 and subsequent years).

.

4. 35(1)(iii)- Expenditure on scientific research

Incentive Currently Available under the Act

Weighted deduction from the business income to the extent of 125 per cent of contribution to an approved research association or university or college or other institution to be used for research in social science or statistical research.

Proposed phase out measures/ Amendment

Deduction shall be restricted to 100 per cent with effect from 01.04.2017 (i.e. from previous year 2017-18 and subsequent years).

.

5. 35(2AA)- Expenditure on scientific research

Incentive Currently Available under the Act

Weighted deduction from the business income to the extent of 200 per cent of any sum paid to a National Laboratory or a university or an Indian Institute of Technology or a specified person for the purpose of approved scientific research programme.

Proposed phase out measures/ Amendment

Weighted deduction shall be restricted to 150 per cent with effect from 01.04.2017 to 31.03.2020 (i.e. from previous year 2017-18 to previous year 2019-20). Deduction shall be restricted to 100 per cent from 01.04.2020 (i.e. from previous year 2020-21 onwards).

.

6. 35(2AB)- Expenditure on scientific research

Incentive Currently Available under the Act

Weighted deduction of 200 per cent of the expenditure (not being expenditure in the nature of cost of any land or building) incurred by a company, engaged in the business of bio-technology or in the business of manufacture or production of any article or thing except some items appearing in the negative list specified in Schedule-XI, on scientific research on approved in-house research and development facility.

Proposed phase out measures/ Amendment

Weighted deduction shall be restricted to 150 per cent from 01.04.2017 to 31.03.2020 (i.e. from previous year 2017-18 to previous year 2019-20). Deduction shall be restricted to 100 per cent from 01.04.2020 (i.e. from previous year 2020-21 onwards).

.

7. 35AD- Deduction in respect of specified business

Incentive Currently Available under the Act

In case of a cold chain facility, warehousing facility for storage of agricultural produce, an affordable housing project, production of fertilizer and hospital weighted deduction of 150 per cent of capital expenditure (other than expenditure on land, goodwill and financial assets) is allowed.

Proposed phase out measures/ Amendment

In case of a cold chain facility, warehousing facility for storage of agricultural produce, hospital, an affordable housing project, production of fertilizer, deduction shall be restricted to 100 per cent of capital expenditure w.e.f. 01.4.2017 (i.e. from previous year 2017-18 onwards).

.

8. 35CCC- Expenditure on notified agricultural extension project

Incentive Currently Available under the Act

Weighted deduction of 150 per cent of expenditure incurred on notified agricultural extension project.

Proposed phase out measures/ Amendment

Deduction shall be restricted to 100 per cent from 1.4.2017 (i.e from previous year 2017-18 onwards).

.

These amendments mentioned in table 2 will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.

Be the first to comment

Leave a Reply