M/s DLF Ventures LLP incorporated on 01-04-2023 has following three business plans for 10 years as alternatives to start with a capital investment of ₹ 100 Crore with an expected rate of return (net profits) of 5% every

CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · PYQS · June 2024
M/s DLF Ventures LLP incorporated on 01-04-2023 has following three business plans for 10 years as alternatives to start with a capital investment of ₹ 100 Crore with an expected rate of return (net profits) of 5% every year and is thinking to start the commercial operations from the financial year 2023-24: (i) Set up a startup company engaged in smart, supply chain management holding a certificate of eligibility from Inter-ministerial board of certification. The entity has approached its company secretary for advising on the best business plan keeping in view of the various tax deductions allowed under the Income Tax Act, 1961, assuming all other conditions having been fulfilled by the entity.

Answer & Explanation:

As per the provisions of section 80-IAC of the Income Tax Act, 1961, M/s DLF Ventures LLP is an eligible start-up and the total amount of quantum of deductions allowed for the entity will be 100% of the profit and gains derived from such business for any three consecutives AY out of 10 years. Thus, the total deductions allowed will be ₹ 100 Crore*5% for 3 years starting from A.Y. 2024-25 to 2026-27 totalling to 5 crore * 3 = ₹ 15 crores.

Topics: Corporate Tax Planning

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