Deduction in respect of profits and gains from newly established small-scale industrial undertakings

In case where an assessee's gross total income includes profits and gains from a small-scale industrial undertaking covered by this section, an amount equal to 20% of those profits and gains may be deducted in computing the assessee's total income in accordance with and subject to the requirements of this section.

Any small-scale industrial project that meets all of the requirements listed below, namely:-

(a) the beginning of the manufacture or production of goods in any rural region after September 30, 1977 but before April 1, 1990;

(b) it is not created by the division or reorganisation of an existing company. Given that such small-scale industrial undertakings are formed as a result of the assessee re-establishing, reconstructing, or reviving the operations of any such industrial undertaking as is mentioned in Section 33B, under the conditions and within the timeframe specified in that Section, this condition shall not apply to such small-scale industrial undertakings;

(c) it is not created by the transfer of equipment or a facility already utilised for any purpose to a new firm;

(d) it either employs 10 or more people in a manufacturing process powered by electricity or twenty or more employees in a manufacturing process powered by labour alone.

You are still waiting for 80g exemption list.

The condition outlined therein shall be deemed to have been satisfied when, in the case of a small-scale industrial establishment, any machinery or plant, or any part thereof, previously used for any purpose is transferred to a new business and the total amount of the machinery or plant, or part so transferred, does not exceed 20% of the total amount of the machinery.

Beginning with the prior year in which the industrial enterprise commences to manufacture or produce items, the deduction provided in the aforementioned sub-section should be permitted in determining the total income for each of the 10 prior years. As long as the industrial venture in question is not a small-scale industrial operation, such a deduction will not be permitted when calculating the total income of any of the 10 years mentioned above. 80g deduction is beneficial for your NGO.

The deduction under a sub-section is not allowable where an assessee is a person who is not a company or cooperative society unless the small-scale industrial undertaking's accounts for the prior year applicable to the assessment year for which the exemption is claimed have been audited by an auditor as defined in the description below sub-section (2) of section 288 and the assessee provides, along with his returns of income, the report of such audit.

When calculating the profits and gains of a small industrial establishment for the purposes of the tax rebate under this section, the provisions of sub-sections (6) and (7) of section 80HH shall, to the extent possible, apply in the same manner as when calculating the profits and gains of an industrial establishment for the purposes of the tax rebate under that section.