As a growth of the manufacturing sector is crucial for employment generation and development of economy.
In order to encourrage manufacture and production of article or things to invest substantial amount in acquisition and installation of new plant and machinery Section 32AC, Section 32AD and Section 32(1)(iia) have been introduced by Finance Act.
Section 32AD has been introduced and enhance additional depreciation to 35% u/s-32(1(iia), with a view to ensure that the manufacturing units which are set up by availing this proposed incentive actually contribute to economic growth of notified backward areas by carrying out the activities of manufacturing for a substantial period of time.
Now an investor may claim upto 80% deduction of his Investment in new plant and Machinery in 1st year of his investments, under:-
Section- 32AC
Section- 32AD
Section- 32(1)(ii) and
Section- 32(1)(iia)
Comparative Analysis of these section may be as under :-
|
Particulars |
Section 32AC Investment Allowance |
Section 32AD Investment in new plant and Machinery in notified Backward Areas in Certain States |
Section- 32(1)(ii) Depreciation |
Section- 32(1)(iia) Additional Depreciation |
|
Eligible Assessee |
Company (Including foreign company) |
Any Assessee |
Any Assessee |
Any Assessee |
|
Eligible Assets |
Brand new Plant and Machinery |
Brand new Plant and Machinery |
Plant and Machinery |
Brand new Plant and Machinery |
|
Purpose |
To be used in manufacturing (Deduction not available to power generating unit) |
To be used in manufacturing/production |
Manufacturing unit or otherwise i.e in office |
To be used in manufacturing/production |
|
Location |
Anywhere in India |
Notified Backward Area in Andhra Pradesh, Bihar, Telangana or West Bengal |
Anywhere in India |
Anywhere in India |
|
Cost on which deduction shall be calculated |
Minimum Cost of Rs. 25 crores, acquired and installed (Both Activity in same Financial Year |
Any Amount |
WDV (Deduction u/s-32AC and 32AD shall not be reduced from the WDV of Block of Assets) |
Any Amount but deductible amount shall be restricted to value of WDV (Deduction u/s-32AC and 32AD shall not be reduced for calculation of Additional depreciation) |
|
Allowable financial Year |
F.Y 2014-15, 2015-16 and Financial 2016-17 |
F.Y 2015-16 and onwards |
Any |
F.Y 2015-16 and onwards |
|
Rate of deduction |
15% |
15% |
15% (if put to use is less than 180 datys, rate shall be 7.5%) and 80% in case of Power Generating Units |
35% (if put to use is less than 180 datys, rate shall be 17.5% and rest 17.5% shall be allowed in next year) |
|
Lock in period |
5 years except transferred in scheme of Amalgamation, Demerger, conversion Firm, proprietor to Company or Company to LLP |
5 years except transferred in scheme of Amalgamation, Demerger, conversion Firm, proprietor to Company or Company to LLP |
|
|
In addition to these allowance, State Government also providing Investment as well as production linked incentives. So now it is a better opportunity for Investors to get more return than the amount invested by them
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