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of <h1>Subsidies Under 10% Central Outright Grant of Subsidy Scheme 1971 Are Capital Receipts, Not Income.</h1> The circular addresses the taxability of subsidies received under the 10 percent Central Outright Grant of Subsidy Scheme, 1971, for industrial units in selected backward areas. It clarifies that the subsidy is intended to support industrial growth rather than supplement profits. The subsidy amount is based on fixed capital, excluding working capital, and requires the recipient to maintain production for at least five years. The Board advises that such subsidies are considered capital receipts for income tax purposes, as they contribute to the capital outlay of the industrial units.
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