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What is section 80-ID ?

This section was introduced from the assessment year 2008-09. This deduction is available to the taxpayers who are engaged in the business of hotel located in a specified area. Also, this deduction is available to the taxpayer who is engaged in the business of building, owning and operating a convention centre located in specified area.

What is covered under the definition of Hotel as per section 80-ID?

Hotel means Hotel of two-star, three-star or four-star category as classified by the Central Government.

What is covered under the definition of Convention Centre as per section 80-ID?

Convention centre" means a building of a prescribed area comprising of convention halls to be used for the purpose of holding conferences and seminars, being of such size and number and having such other facilities and amenities, as may be prescribed.

Which are the areas covered under section 80-ID ?

S.No. Type of hotel/ source of income Specified Area
1. 2/3/4 star hotel or convention centre National capital territory of Delhi and Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad
2. 2/3/4 star hotel at a world heritage site Districts of Agra, Jalgaon, Aurangabad, Kancheepuram, Puri, Bharatpur, Chhatarpur, Thanjavur, Bellary, South 24 Parganas (excluding areas falling within the Kolkata Urban Agglomeration), Chamoli, Raisen, Gaya, Bhopal, Panchmahal, Kamrup, Goalpara, Nagaon, North Goa, South Goa, Darjeeling and Nilgiri

What are the conditions to claim deduction u/s 80-ID ?

1. New Enterprise : It should be a new undertaking. The undertaking should not be formed by splitting up, or reconstruction, of a business already in existence.

Exception : Any undertaking discontinued due to extensive damage or destruction(any building, machinery, plant or furniture owned and used for such business) due to any natural calamity or other unforeseen circumstances such as:-

  • i. Flood, typhoon, hurricane, cyclone, earthquake or other natural calamity, or
  • ii. riot or civil disturbance, or
  • iii. accidental fire or explosion, or
  • iv. enemy action or action taken in combat

2. New plants & Machineries : It should not be formed by transferring old plant & machinery which was previously used for any purpose.

Exception :
  • Value of old plant & machineries is allowed upto 20% of the total value of plant & machineries.
  • Second hand imported machine will also be treated as new plant & machine under this section provided :
    1. Such plant or machinery was not used in India prior to installation.
    2. Plant or machinery is imported in India.
    3. Deduction of depreciation on such plant or machinery has not been/will not be allowed for prior period of installation.
Period of commencement :
Type of hotel/ source of income Construction Applicable from assessment year
2/3/4 star hotel  Constructed & started functioning during 01 April, 2007 and 31 July, 2010 Assessment year 2008-09 onwards
2/3/4 star hotel at a world heritage site Constructed & started functioning during 01 April, 2008 and 31 July, 2013 Assessment year 2009-10 onwards
Convention centre Constructed during 01 April, 2007 and 31 July, 2010 Assessment year 2008-09 onwards

4. Audit Report :This deduction is allowed if accounts of the assessee has been audited by a CA and audit report has been submitted. Audit report needs to be submitted in Form No. 10CCBBA

5. Income Tax Return :- One of the conditions given in this section is that assessee needs to file his Income Tax Return and should also claim the amount of deduction in return. Moreover, income tax return needs to be filed on time as per section 139(1). You cannot claim deduction in case of belated return.

6. While computing total income of assessee , no deduction shall be allowed under any other section contained in Chapter VIA or section 10AA.

What is the amount of deduction available u/s 80-ID ?

100% of the profit is allowed as deduction for 5 consecutive Assessment Years from Initial Assessment Year

Initial Assessment Year here means the assessment year relevant to the previous year in which the business of the hotel starts functioning or convention centre starts operating on a commercial basis.
CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.