Tax credit on industrial undertakings established before July 01, 2011 (Section 65E);

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This blog is in continuation to the series "Curtailing the Tax Liability (Part II) - Tax Credits".



Disclaimer: This blog will be updated over the period of time with practical examples, sample letters and relevant case laws and due to the volatility of tax statutes it is subject to unprecedented changes as and when required.


Tax credit on industrial undertakings established before July 01, 2011 (Section 65E)


A company established before July 01, 2011 shall be entitled to tax credit for 5 Years if it invests any amount with atleast 70% of equity raised through issuance of new shares in purchase and installation of Plant and Machinery for an industrial undertaking including [corporate dairy farming] for expansion or a new project. 

Where the company maintains separate accounts of an expansion project or a new project, as the case may be, the taxpayer shall be allowed a tax credit of the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, attributable to such expansion project or new project. 

In all other cases, the credit shall be such proportion of the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, as is the proportion between the new equity and the total equity including new equity. 



Computation 



Tax Credit = (A / B) X C 




A = Tax assessed before any tax credit 

B = Equity raised through issuance of shares for cash consideration 

C = Total amount invested for industrial undertaking








NOTE: In addition to above please click here to read Miscellaneous Provision of Tax Credit (Section 65);


Index of Tax Credits

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