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Section 35ad applicability

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Ridhima Jain

33 Points Posted on 03 May 2023

if an already incorporated company opens a new manufacturing unit of it in other state, is investment linked tax incentives under section 35 AD available
to it.?

also in addition what other benefits it can claim for new factory unit under income tax.

Replies (3)

Quick Summary

This discussion clarifies that an already incorporated company can indeed claim investment-linked tax incentives under Section 35AD when establishing a new manufacturing unit in a different state. The section allows for a 100% deduction of capital expenditure for eligible new units. Beyond Section 35AD, new factories can also benefit from deductions on depreciation, setup expenses, loan interest, and potentially enjoy reduced tax rates and loss deductions.

CA Rakesh Ishi

Working at Private Company

7751 Points Posted on 04 May 2023

Yes, an already incorporated company can claim investment-linked tax incentives under Section 35AD for setting up a new manufacturing unit in another state. Section 35AD provides for a deduction of 100% of the capital expenditure incurred in the setting up of a new manufacturing unit, subject to certain conditions. The deduction can be claimed in the year in which the asset is put to use.

In addition to the investment-linked tax incentives under Section 35AD, a new factory unit can also claim other benefits

1. Deduction of Depreciation

2. Deduction of Expense of setting up

3. Deduction of Interest on Loan

4. Reduced Rate of Taxes

5. Deduction of Loss with certain conditions