Where to set up Hospitals & Hotels for Tax Holiday

NEW DELHI. New Hospitals and Hotels have been granted 5 year Income Tax Holiday if they are set up in the specified areas of India.  

The Finance Bill 2008 has proposed to insert a new sub-section (11C) in Section 80-IB of Income Tax Act so as to extend a five year tax holiday to hospitals as under:

‘(11C) The amount of deduction in the case of an undertaking deriving profits from the business of operating and maintaining a hospital located anywhere in India, other than the excluded area, shall be hundred per cent. of the profits and gains derived from such business for a period of five consecutive assessment years, beginning with the initial assessment year, if–

(i) the hospital is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2013;

(ii) the hospital has at least one hundred beds for patients;

(iii) the construction of the hospital is in accordance with the regulations or bye-laws of the local authority; and

(iv) the assessee furnishes along with the return of income, a report of audit in such form and containing such particulars, as may be prescribed, and duly signed and verified by an accountant, as defined in the Explanation to sub-section (2) of section 288, certifying that the

deduction has been correctly claimed.

Explanation.— For the purposes of this sub-section,—

(a) a hospital shall be deemed to have been constructed on the date on which a completion certificate in respect of such construction is issued by the local authority concerned;

(b) “initial assessment year” means the assessment year relevant to the previous year in which the business of the hospital starts functioning;

(c) “excluded area” shall mean an area comprising–

(i) Greater Mumbai urban agglomeration;

(ii) Delhi urban agglomeration;

(iii) Kolkata urban agglomeration;

(iv) Chennai urban agglomeration;

(v) Hyderabad urban agglomeration;

(vi) Bangalore urban agglomeration;

(vii) Ahmedabad urban agglomeration;

(viii) District of Faridabad;

(ix) District of Gurgaon;

(x) District of Gautam Budh Nagar;

(xi) District of Ghaziabad;

(xii) District of Gandhinagar; and

(xiii) City of Secunderabad;

(d) the area comprising an urban agglomeration shall be the area included in such urban agglomeration on the basis of the 2001 census.’.

This amendment will take effect from 1st April, 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years.

Clause 16 of the Finance Bill 2008 seeks to amend section 80-ID of the Income-tax Act which relates to deduction in respect of profits and gains from business of hotels and convention centres in specified areas.

Section 80-ID of the Act alrady provides for hundred percentage of tax deduction for a period of five years to new hotels of two, three and four star categories and convention centres which are constructed and started or start functioning at any time during the period beginning on 1st April, 2007 and ending on 31st March, 2010. For availing the above benefit the hotel or convention centre should be located in the specified area, which has been defined as the National Capital Territory of Delhi and the districts of

Faridabad, Gurgaon, Gautam Buddha Nagar and Ghaziabad. It is proposed to extend the scope of tax benefit available in this section also to new two-star, three-star or four-star hotel, located in specified district having World Heritage Site, if such hotel is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2013. Specified districts having

World Heritage Site are proposed to be the districts of Agra, Jalgoan, Aurangabad, Kancheepuram, Puri, Bharatpur, Chhatarpur, Thanjavur, Bellary, South 24 Parganas (excluding areas failing within Kolkata Urban agglomeration on the basis of the 2001 census), Chamoli, Raisen, Gaya, Bhopal, Panchmahal, Kamrup, Goalpara, Nagaon North Goa, South Goa, Darjeeling and Nilgiri.

                This amendment will take effect from 1st April, 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years.

(Source: Allindiantaxes)

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