26. Amendment of section 80-IAC.
In section 80-IAC of the Income-tax Act, in the Explanation below sub-section (4),––
(a) for clause (i), the following clause shall be substituted, namely:––
‘(i) “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;’;
(b) in clause (ii),––
(i) in sub-clause (a), for the figures “2019”, the figures “2021” shall be substituted;
(ii) in sub-clause (b), for the words, figures and letters “previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021”, the words “seven previous years beginning from the year in which it is incorporated” shall be substituted.
Notes on Clauses:
Clause 26 of the Bill seeks to amend section 80-IAC of the Income-tax Act relating to special provision in respect of specified business.
The said section, inter alia, provides that deduction under the said section shall be available to an eligible start-up, if it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019; the total turnover of its business does not exceed twenty-five crore rupees in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021; and it is engaged in the eligible business.
It is proposed to amend the said section so as to provide that deduction under the said section shall be available to an eligible start-up, if it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2021; the total turnover of its business does not exceed twenty-five crore rupees in any of the seven previous years beginning from the year in which it is incorporated.
It is also proposed to amend the definition of "eligible business" to mean 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.
These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-2019 and subsequent years.
