20. Five year tax holiday to hospitals located in certain areas
20.1 Sub-section (11B) of section 80-IB provides for a tax holiday for five consecutive assessment years, beginning from the initial assessment year, to an undertaking deriving profits from the business of operating and maintaining a hospital in a rural area. The undertaking is required to fulfil certain conditions specified in the said sub-section. One of the conditions is that the hospital is constructed at any time during the period beginning on the 1st day of October, 2004 and ending on the 31st day of March, 2008.
20.2 With a view to encouraging investment in hospitals in non-metro cities, the benefit of this sub-section has been extended to hospitals located anywhere in India, other than the excluded area. Hence, a new sub-section (11C) has been inserted in the said section 80-IB. The new sub-section, inter-alia, seeks to provide that,-
(i) the tax benefit shall be with respect to the profit derived from the business of operating and maintaining a hospital for a period of five consecutive assessment years, beginning from the initial assessment year;Online GST Certification Course by TaxGuru & MSME- Click here to Join
(ii) the tax benefit will be available to hospital which is constructed and has started or start functioning at any time during the period beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2013;
(iii) the excluded area shall mean an area comprising the urban agglomerations of Greater Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Bangalore and Ahmedabad, the districts of Faridabad, Gurgaon, Ghaziabad, Gautam Budh Nagar and Gandhinagar and the city of Secunderabad;
(iv) the area comprising an urban agglomeration shall be the area included in such urban agglomeration on the basis of the 2001 census.
20.3 Other existing conditions of sub-section (11B) of section 80-IB have also been incorporated in the new sub-section.
20.4 Applicability – This amendment has been made applicable with effect from 1st April, 2009 and will accordingly apply in relation to assessment year 2009-10 and subsequent assessment years.
Extract from Explanatory Notes to The Provisions of the Finance Act, 2008 vide circular no. 1/ 2009, dated 27th Mar, 2009.