9911796707
TMI BlogTax Incentives for Bio-Degradable Waste Management in India : Clause 145 of the Income Tax Bill, 2025 Vs. Section 80JJA of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... ntivize environmentally conscious business practices, particularly those that contribute to sustainable waste management and the production of renewable resources. With the introduction of the Income Tax Bill, 2025, it is imperative to analyze whether Clause 145 merely reiterates the existing framework u/s 80JJA or introduces substantive changes in the scope, eligibility, or quantum of deduction. This commentary provides a detailed, itemized analysis of Clause 145, examining its text, purpose, and implications, and then undertakes a comparative analysis with the existing Section 80JJA. The aim is to illuminate the nuances of both provisions, highlight any legislative evolution, and address their practical implications for stakeholders. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one or more of the following: * Generating power; * Producing bio-fertilizers, bio-pesticides, or biological agents; * Producing bio-gas; * Making pellets or briquettes for fuel or organic manure. * Quantum of Deduction: Deduction is equal to the whole amount of profits and gains derived from such business. * Duration: The deduction is available for five consecutive tax years, starting with the tax year in which the business commences. 3.2 Interpretation of Key Terms * "Collecting and processing or treating of bio-degradable waste": This phrase encompasses the entire value chain of bio-degradable waste management, from collection to its conversion into usable products or energy. The inclusion of both "processing" and "treati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agents": The term "biological agents" is not defined, potentially leading to interpretive uncertainty about the range of products covered. 4. Practical Implications 4.1 Impact on Stakeholders * Businesses: The provision offers a substantial fiscal incentive, effectively exempting profits from eligible activities for five years. This can significantly improve project viability, attract investment, and accelerate the adoption of advanced waste management practices. * Startups and SMEs: New entrants in the bio-waste sector stand to benefit, as the deduction is linked to the commencement of business. * Regulators: The provision necessitates robust monitoring and verification mechanisms to prevent misuse, such as misclassification of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains from eligible business 100% of profits and gains from eligible business Period of Deduction Five consecutive tax years, beginning with the year of commencement Five consecutive assessment years, beginning with the assessment year relevant to the previous year in which business commences Wording/Terminology Tax year Assessment year/Previous year Other Features No explicit monetary cap; no reference to "other biological agents" No explicit monetary cap (post-1999); includes "other biological agents" 5.2 Substantive Differences and Similarities * Scope of Eligible Activities: * Both provisions cover broadly similar activities, with minor differences in wording. Clause 145 refers to "biological agents," whereas Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r": While both are functionally similar, consistency in terminology across the Income Tax Bill, 2025, is important to avoid confusion. * Omission of "Other Biological Agents": If Clause 145 is interpreted narrowly, certain innovative products might be excluded from the deduction, potentially discouraging innovation. 5.4 Comparison with Other Jurisdictions Many jurisdictions offer fiscal incentives for renewable energy and waste management. However, the Indian approach-providing a full deduction of profits for a fixed period-is relatively generous and direct, compared to investment-linked incentives or accelerated depreciation in other countries. The focus on bio-degradable waste is also aligned with India's specific environmental ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
