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Unit 5: Exemptions and Deductions – II

5.5 Keywords Notes

Amalgamation: An amalgamation is distinct from a merger because neither of the combining
companies survives as a legal entity.

Assessment Years: Assessment year means the current year.
Convertible Foreign Exchange: It means foreign exchange which is for the time being treated by
the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign
Exchange Regulation Act, 1973 (46 of 1973), and any rules made there under or any other
corresponding law for the time being in force.

Deductions: An expense subtracted from adjusted gross income when calculating taxable income,
such as for state and local taxes paid, charitable gifts, and certain types of interest payments.
Demerger: Demerger is a form of corporate restructuring in which the entity’s business operations
are segregated into one or more components.
Electronic Hardware Technology Park: It means any park set up in accordance with the Electronic
Hardware Technology Park (EHTP) Scheme notified21 by the Government of India in the Ministry
of Commerce and Industry.
Export Turnover: Export turnover means the consideration in respect of export of articles or
things or computer software received in, or brought into, India by the assessee in convertible
foreign exchange in accordance with sub-section (3), but does not include freight,
telecommunication charges or insurance attributable to the delivery of the articles or things or
computer software outside India or expenses, if any, incurred in foreign exchange in providing
the technical services outside India.
Free Trade Zone: A free trade zone (FTZ) or export processing zone (EPZ), also called foreign-
trade zone, formerly free port is an area within which goods may be landed, handled,
manufactured or reconfigured, and re-exported without the intervention of the customs
authorities.
Relevant assessment year: It means any assessment year falling within a period of ten consecutive
assessment years referred to in this section.
Software Technology Park: It means any park set up in accordance with the Software Technology
Park Scheme notified by the Government of India in the Ministry of Commerce and Industry.
Special Economic Zone: It means a zone which the Central Government may, by notification in
the Official Gazette, specify as a special economic zone for the purposes of this section.

Tax Benefit: A tax benefit is an allowable deduction on a tax return intended to reduce a taxpayer’s
burden while typically supporting certain types of commercial activity.

5.6 Review Questions

1. Discuss Free Trade Zone.

2. What are the conditions to be fulfilled in Free Trade Zone?
3. Throw some light on the deductions of Free Trade Zone.
4. Describe the consequences of amalgamation and demerger of Free Trade Zone.
5. Elucidate the conditions to be fulfilled under Special Economic Zone.
6. Describe the amount of deduction in Special Economic Zone.

7. Highlight the consequences for amalgamation and demerger of Special Economic Zone.

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