There is an urgent need to invest heavily in building up of a viable and efficient infrastructure in the agriculture sector in India. This would necessitate building up of proper computerized infrastructural facilities and electronic highways for procurement, dissemination of best agricultural practices, weather information, storage practices etc. as well as offering the best possible price to the farmers. Also, this would result in cutting down intermediaries/ middlemen and thereby reduce the transaction costs.

Section 80-IA of the Income-tax Act, 1961 provides for deduction in respect of profits/ gains from industrial undertakings engaged in infrastructure development. This covers road, bridge or rail, highway projects, water projects, ports, airports, telecommunication services, industrial parks and power generation. The definition of infrastructure should be extended to include rural infrastructure like:

  • Village kiosks housing Information Technology infrastructure like computers, VSATs, Modems, smart cards, projectors, screens etc.
  • Support infrastructure like solar-panels, UPS, Batteries etc. at these locations.
  • Water harvesting facilities like check dams, wells ponds and other rain harvesting structures.
  • Storages including farmer facility center housing training centers, cafeteria, health clinic, pharmacy, bank counters and necessary parking area.
  • Green houses and poly houses.


The tax incentives may take the following forms:

(i) deduction of proportionate profits for the total value of turnover arising from such computerized infrastructural facilities (in line with the provisions of section 80-IA read in conjunction with section 80HHC) for purposes of simplification and avoidance of disputes.

(ii) deduction of the total expenditure incurred, both capital and revenue, for creating such infrastructure (similar to the provisions of section 35).


Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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Category : Income Tax (28533)
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Tags : Budget (1960) Budget 2018 (402) ICAI (2772)

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