Page 169 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes Self Assessment

Fill in the blanks:

11. …………….. allows tax holiday to the new undertakings or existing undertakings on their
substantial expansion in the States of Himachal Pradesh, Uttaranchal, Sikkim and North-
Eastern States.
12. The tax holiday in the States of Himachal Pradesh and Uttaranchal will be 100% for the fi rst
five assessment years and ………………. for the next five assessment years.

13. Tax holiday in the States of Sikkim and North-Eastern States will be ………………… for ten
assessment years commencing from the initial assessment year.

7.4 Provisions for Tax Holiday

Tax holiday in respect of profits and gains from eligible business of certain undertakings in

North-Eastern States (Section 80-IE) will be discussed in this section. This section provides for an
incentive to an undertaking which has during the period between 1st April, 2007 and 1st April,
2017, begun or begins, in any of the North-Eastern States (i.e., the States of Arunachal Pradesh,
Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura) -
1. to manufacture or produce any eligible article or thing;
2. to undertake substantial expansion to manufacture or produce any eligible article or
thing;
3. to carry on any eligible business.
Eligible article or thing means the article or thing other than the following:

(a) goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985
which pertains to tobacco and manufactured tobacco substitutes;
(b) pan masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff
Act, 1985;
(c) plastic carry bags of less than 20 microns; and
(d) goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985
produced by petroleum oil or gas refi neries.

Substantial expansion means increase in the investment in the plant and machinery by at least
25% of the book value of plant and machinery (before taking depreciation in any year), as on the
first day of the previous year in which the substantial expansion is undertaken.

Eligible business means the business of -
(a) hotel (not below two star category);
(b) adventure and leisure sports including ropeways;
(c) providing medical and health services in the nature of nursing home with a minimum
capacity of 25 beds;
(d) running an old-age home;
(e) operating vocational training institute for hotel management, catering and food craft,
entrepreneurship development, nursing and Para-medical, civil aviation related training,
fashion designing and industrial training;

(f) running information technology related training centre;

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