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Benefits u/s 80ID

CA AYUSH AGRAWAL , Last updated: 23 August 2012  

Five year tax holiday for hotels located in specified districts having a world Heritage Site:

Section 80-ID of the Income-tax Act provides for a five year tax holiday to new hotels of two, three and four star categories and convention centres. It is a requirement that such hotel must be constructed and has started or starts functioning at any time during the period beginning on the 1st day of April,2007 and ending on the 31st day of March, 2010. Further, such convention centre must be constructed at any time during the above specified period. The tax holiday is available to profits derived from the business of hotels or convention centres for five consecutive assessment years beginning from the initial assessment year. For availing the above benefit, the hotel or convention centre should be located in the specified area. The specified area has been defined as the National Capital Territory of Delhi and the districts of Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad.

With a view to promoting tourism and to attract tourists to certain World Heritage Sites in India, the scope of tax benefits available in this section has been extended also to new two-star, three-star or four-star category hotels located in specified districts having a World Heritage Site. Such hotels are required to be constructed and 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. Specified districts having a World Heritage Site are the districts of Agra, Jalgaon, Aurangabad, Kancheepuram, Puri, Bharatpur, Chhatarpur, Thanjavur, Bellary, South 24 Parganas (excluding areas falling within the 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.

Other conditions:

The deduction will not be allowed for an existing unit split or transferred to a new unit.

The assessee should submit along with the return an audit report in such form as prescribed.

The convention centres should have the minimum area and facilities as prescribed.

The CBDT has prescribed the audit report form and the specifications of the convention centres. A new Rule 18DE has been inserted in the Income Tax Rules. The prescribed specifications for the convention centre are that it should have a minimum covered plinth area of 25000 sq.mtrs, should have a minimum seating capacity of 3000 and should have at least 10 convention halls. In addition the facilities mandatorily required are:

1. Modern public address system, slide and power point projection system and LCD projector or Video screening facility. (What is a power point projection system? Power point is a Microsoft programme - the LCD projector can easily be used for this.)

2. Documentation centre with computers and printers, telephone with STD/ISD facilities, E-mail, photocopy and scanning facility along with trained operators to provide these facilities.

3. Completely centrally air-conditioned.

4. Adequate parking facility and other public conveniences as per the local building regulations and should also fulfill all local building regulations in respect of fire and safety.

In computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or section 10AA, in relation to the profits and gains of the undertaking.

No further deduction allowed under section 80IA/80IB/80IC/10A or 10B

A new form No. 1OCCBBA has been prescribed for filing the audit report.

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.


CA Ayush Agrawal

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