Section 35D reduction of Tax entails to amount spend which may usually be rejected on the ground that it is a capital nature or is incurred prior to the setting up of a premises.
Eligibility for Claiming Section 35D Deduction
Section 35D reduction could be asked by an Indian Company or by a person apart from a company who lives in India. The expenses that can be asked as a reduction under Section 35D must be in accordance to:
- Expenditure incurred before the commencement of business.
- Expenditure incurred after the commencement of business in connection with the extension of existing undertaking or in connecting with setting up a new unit.
Expenses Deductible under Section 35D
The below charges are allowed for reduction under Section 35D:
- Expenditure incurred in connection with
- Preparation of a feasibility report.
- Preparation of a project report.
- Conducting a market survey or any other survey necessary for the business of the asses see.
- Engineering services relating to the business of the asses see.
- Legal charges for drafting any agreement between the asses see and any other person having any relation to the setting up of the business of the asses see.
- Where the asses see is a company, also, expenditure:
- By way of legal charges for drafting the MOA / AOA or printing of MOA / AOA.
- Incorporation fee.
- For issue, for public subscription , of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus.
- Other expenses as given by the Government in different duration..
Amount Deductible under Section 35D
The maximum deductible amount under Section 35D should not be over 5% of the cost of the project. In the case of a company, the total amount cannot exceed 5% of the cost of the project or the capital employed in the premises of the company.
The sum needed as reduction as under the limit will be authorized as a reduction in 5 same yearly installment starting with the last year starting of business or the last year where the extension of company undertaking is done ,the new industrial sector start production .