Deduction under section 80PA of Income Tax Act, 1961

Where the gross total income of an assessee, being a Producer Company having a total turnover of less than one hundred crore rupees in any previous year, includes any profits and gains derived from eligible business, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100% of the profits and gains attributable to such business for the previous year relevant to an assessment year commencing on or after the 1st day of April, 2019, but before the 1st day of April, 2025.

For the purposes of this section, —

(A)”eligible business” means

1. The marketing of agricultural produce grown by the members; or

2. The purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to the members; or

3. The processing of the agricultural produce of the members

(B) “producer company” means

A producer company is basically a body corporate registered as Producer Company under Companies Act, 2013  and shall carry on or relate to any of following activities classified broadly: –

Deduction under section 80PA of Income Tax Act, 1961

(a) Production, harvesting, processing, procurement, grading, pooling, handling, marketing, selling, export of *primary produce of the Members or import of goods or services for their benefit.

(b) Rendering technical services, consultancy services, training, education, research and development and all other activities for the promotion of the interests of its Members;

(c) Generation, transmission and distribution of power, revitalization of land and water resources, their use, conservation and communications relatable to primary produce;

(d) Promoting mutual assistance, welfare measures, financial services, insurance of producers or their primary produce.

(C) “member” means

who fulfils the quantum and period of patronage of the Producer Company as may be required by the articles.

Example: –

Turnover of Eligible Business Turnover of other business Total Turnover Whether eligible to claim deduction Reason
75 Crores 24 Crores 99 Crores Yes Total Turnover is less than Rs.100 crores
80 Crores 25 Crores 105 Crores No Turnover is more than Rs.100 crores
50 Crores 50 Crores 100 Crores No Turnover is not less than Rs.100 crores
NIL 80 Crores 80 Crores No Turnover does not include profit derived from eligible business
100 Crores NIL 100 Crores No Turnover is not less than Rs.100 crores

Author Bio

Qualification: CA in Practice
Company: Oswal & Heda Chartered Accountants
Location: Pune, Maharashtra, India
Member Since: 27 Mar 2021 | Total Posts: 16
Anubhav has over 5 years of professional experience in handling Audit & Assurance of various entities, Direct & Indirect Tax Advisory services, Project financing, Litigation Services, RERA, Preparation and Finalization of Income Tax returns, Monthly Compliance which includes GST, TDS and oth View Full Profile

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