Capital Subsidy & Training Subsidy

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....apital Subsidy & Training Subsidy<br> Query (Issue) Started By: - velayutham panchatcharam Dated:- 7-7-2010 Last Reply Date:- 11-7-2010 Income Tax<br>Got 1 Reply<br>Income Tax<br>I am working in MNC which is located a Unit in SEZ. We have received capital subsidy and training subsidy. For both subsidy what is the impact on tax aspects. Please clarify with case laws. Reply By DEV KUMAR KOTHARI: The....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Reply: From whom subsidy is received? What is purpose and scheme of subsidy? What are obligations attached with receipt of subsidy? Whetehr subsidy is for meeting costs of assets or for the purpsoe of general public welfare like development of particualr area or industry? These are important aspects to be consdered. Generally capital subsidy to meet part fo cost of assets will go to reduce cost ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of assets as per S. 43 of IT Act,as it stands now. However, in some circumstances it may not go to reduce the cost of assets adn can be consiered as 'capital receipt', neither taxable nor reducable from cost of assets. Training subsidy can be reduced from training expenses- it will be in nature of revenue receipt as it is to meet revenue expenses. In case trainign costs are capitalized and amorti....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....zed, then also trainign subsidy will be reduced from amortized costs. In this case also on consideration of purpsoe and schem of the subsidy a case of capital receipt can be madeout. However, in case of SEZ unit, will it make much difference? This is also to be considered because you have various exemption.<br> Discussion Forum - Knowledge Sharing ....