Section 80LA : Deduction For Certain Income Of Offshore Banking Units

Offshore Banking Unit

As per Section 2(u) of the Special Economic Zones Act, 2005, Offshore Banking Unit means a branch of a bank located in SEZ. The branch needs to obtain the permission under the Banking Regulation Act, 1949 [ Section 23(1)(a)].

International Financial Service Centre

As per Section 2(q) of the Special Economic Zones Act, 2005, International Financial Service Centre means a Centre which has been approved by the Central Government under Section 18(1) of the SEZ Act, 2005.

What is section 80-LA?

Tax concession under this section is provided to Offshore Banking Unit and International Financial service centre. Under this section, eligible assessee will get tax deduction on profit for specified period provided certain conditions given under this section is satisfied.

Who are eligible assessee to claim deduction u/s 80-LA?

• A scheduled bank or a foreign bank having offshore banking unit in a SEZ
• A unit of International Financial Services Centre

What is eligible income to claim tax deduction u/s 80-LA ?

The deduction will be allowed for the following incomes included in gross total income of such assessee :

• Income from offshore Banking Unit in a SEZ, or
• From any unit of International Financial Service Centre
• Income from the banking business with :
  1. Undertaking located in a SEZ or
  2. Any undertaking which develops, develops & operated or operates and maintains a SEZ

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

• Certificate of Chartered Accountant in Form 10CCF should be filed.
• Return of income should be filed and deduction should be claimed in the return.
• A copy of a permission under section 23(1) of the Banking Regulation Act should be filed with the return.

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

*The beginning assessment year relevant to the previous year will be the year in which permission as Banking Regulation Act or permission of SEBI or under any other law, is obtained.