Amendment of section 80LA.
28. In section 80LA of the Income-tax Act, with effect from the 1st day of April, 2020,––
(i) for sub-section (1), the following sub-sections shall be substituted, namely:––
“(1) Where the gross total income of an assessee, being a scheduled bank, or, any bank incorporated by or under the laws of a country outside India; and having an Offshore Banking Unit in a Special Economic Zone, includes any income referred to in sub-section (2), there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such income, of an amount equal to––
(a) one hundred per cent. of such income for five consecutive assessment years beginning with the assessment year relevant to the previous year in which the permission, under clause (a) of sub-section (1) of section 23 of the Banking Regulation Act, 1949 or permission or registration under the Securities and Exchange Board of India Act,1992 or any other relevant law was obtained, and thereafter;
(b) fifty per cent. of such income for five consecutive assessment years.
(1A) Where the gross total income of an assessee, being a Unit of an International Financial Services Centre, includes any income referred to in sub-section (2), there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such income, of an amount equal to one hundred per cent. of such income for any ten consecutive assessment years, at the option of the assesse, out of fifteen years, beginning with the assessment year relevant to the previous year in which the permission, under clause (a) of sub-section (1) of section 23 of the Banking Regulation Act, 1949 or permission or registration under the Securities and Exchange Board of India Act,1992 or any other relevant law was obtained.”;
(ii) in sub-section (2), in the opening portion, for the word, brackets and figure “sub-section (1), the words, brackets, figures and letter “sub-section (1) and sub-section (1A)” shall be substituted
Notes on Clauses:
Clause 28 of the Bill seeks to amend section 80LA of the Incometax Act relating to deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre.
The said section, inter alia, provides that where the gross total income of an assessee, (i) being a scheduled bank, or, any bank incorporated by or under the laws of a country outside India; and having an Offshore Banking Unit in a Special Economic Zone; or
(ii) being a Unit of an International Financial Services Centre, includes any income referred to in sub-section (2), there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such income, of an amount equal to (a) one hundred per cent. of such income for five consecutive assessment years beginning with the assessment year relevant to the previous year in which the permission, under clause (a) of sub-section (1) of section 23 of the Banking Regulation Act, 1949 or permission or registration under the Securities and Exchange Board of India Act, 1992 or any other relevant law was obtained, and thereafter; (b) fifty per cent. of such income for five consecutive assessment years.
It is proposed to amend the said section by substituting subsection (1) with sub-section (1) and (1A) so as to provide that the deduction specified in the said section in respect of an an Unit of International Financial Services Centre shall be allowed at one hundred per cent. for ten years. In addition the deductions may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning with the assessment year relevant to the previous year in which the permission referred to in clause (a) of sub-section (1) of the said section was obtained.
This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-2021 and subsequent assessment years.
