Deduction in Section 80-IAC of Income Tax Act, 1961

The provisions of section 80- IAC, applicable from the assessment year 2017-18, are given below –

• Conditions –

1. The assessee is a company or a limited liability partnership (LLP).
2. It is engaged in an eligible business. “ Eligible business” means-

A business carried out by an eligible start-up engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment generation or wealth creation.

3. The above company or LLP is incorporated after March 31, 2016 but before April 01, 2021 (i.e., 1/04/2016 to 31/03/2021).
4. Annual business turnover of the company or LLP does not exceed Rs.100 crore in the previous year relevant to the assessment year for which deduction is claimed.
5. It holds a certificate of eligible business from the Inter-Ministerial Board of Certification. The Inter-Ministerial Board setup by Department of Industrial Policy and Promotion validates Start-up for granting tax related benefits. A DIPP recognized Start-up shall be eligible to apply to the Inter-Ministerial Board for full deduction on the profits and gains from business. An Application to the Inter Ministerial Board is made in FORM 1 along with the document.
6. The company or LLP is not formed by splitting up, or the reconstruction, of a business already in existence.
7. It is not formed by the transfer to a new business of a machinery or plant previously used for any purpose

• Amount of deduction – if the above conditions are satisfied, 100 percent of the profits and gains derived from such business is deductible for 3 consecutive assessment years. However, this deduction may, at the option of the assessee, be claimed by it for any 3 consecutive assessment years out of 10 years beginning from the year in which the eligible start up is incorporated. Books of account should be audited and audit report should be submitted along with the return of income.

Standard Operating Procedure (SOP) to be followed by the exporters

1. Through the Circular No.131/1/2020-GST dated 23rd January, 2020 Central Board of Indirect Taxes and Customs has communicated that several cases of monetisation of credit fraudulently obtained or ineligible credit through refund of Integrated Goods & Service Tax (IGST) on exports of goods have been detected in past few months. On verification, several such exporters were found to be non-existent in a number of cases.
2. In all these cases it has been found that the Input Tax Credit (ITC) was taken by the exporters on the basis of fake invoices and IGST on exports was paid using such ITC.
3. To mitigate the risk, the Board has taken measures to apply stringent risk parameters-based checks driven by rigorous data analytics and Artificial Intelligence tools based on which certain exporters are taken up for further verification. The refund scrolls in such cases are kept in abeyance till the verification report in respect of such cases is received from the field formations. Further, the export consignments/shipments of concerned exporters are subjected to 100 % examination at the customs port.
4. Exporters whose scrolls have been kept in abeyance for verification would be informed at the earliest possible either by the jurisdictional CGST or by Customs.
5. To expedite the verification, the exporters on being informed in this regard or on their own volition should fill in information in the format attached as Annexure ‘A’ to the Circular and submit the same to their jurisdictional CGST authorities for verification by them.

Standard Operating Procedure (SOP) to be followed by exporters