Income-Tax Act 1961 Amended Through Finance Act 2015 to Provide Certain Tax Benefits to Notified Backward Areas in Specified States Including State of Bihar to Give.

These Areas an Opportunity to Grow Faster;21 Districts of Bihar Notified as Backward Areas; Any Manufacturing Undertaking or Enterprise Set-Up During the Period From 01.04.2015 to 31.03.2020 in the Aforesaid Backward Areas of Bihar will be Eligible for 15% Additional Depreciation and 15%  Investment Allowance Under the Income-Tax Act, on the Cost of Plant and Machinery Acquired and Installed by it During the Said Period.     

The provisions of the Income-tax Act 1961 have been amended through Finance Act 2015 to provide certain tax benefits to notified backward areas in specified States including State of Bihar to give these areas an opportunity to grow faster.  To give effect to the amendment, the following 21 districts of Bihar have been notified as Backward Areas vide Notification No. S.O. 2241(E) dated 17.08.2015:

  1. Patna
  2. Nalanda
  3. Bhojpur
  4. Rohtas
  5. Kaimur
  6. Gaya
  7. Jehanabad
  8. Aurangabad
  9. Nawada
  10. Vaishali
  11. Sheohar
  12. Samastipur
  13. Darbhanga
  14. Madhubani
  15. Purnea
  16. Katihar
  17. Araria
  18. Jamui
  19. Lakhisarai
  20. Supaul
  21. Muzaffarpur

Any manufacturing undertaking or enterprise set-up during the period from 01.04.2015 to 31.03.2020 in the aforesaid backward areas of Bihar will be eligible for 15% additional depreciation under Section 32(1)(iia) and 15%  investment allowance under Section 32AD of the Income-tax Act, on the cost of plant and machinery acquired and installed by it during the said period. The aforesaid incentives are in addition to other tax benefits available under the Income-tax Act.  Thus a manufacturing undertaking/enterprise set up in any of these areas during the aforesaid period will be eligible for 35% (instead of 20%) of additional depreciation. This would be over and above the normal depreciation of 15%. Besides, a company engaged in manufacturing will also be eligible for 30% (instead of 15%) of investment allowance if its investment in new plant and machinery during the period 1.4.2015 to 31.3.2017 exceeds Rs.25 crore.


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June 2021