Capital Subsidy & Training Subsidy

[velayutham panchatcharam]

I am working in MNC which is located a Unit in SEZ. We have received capital subsidy and training subsidy. For both subsidy what is the impact on tax aspects. Please clarify with case laws.

AI Summary

Understanding Tax Implications of Capital and Training Subsidies in SEZs: Key Factors and Section 43 Considerations An individual working at an MNC in a Special Economic Zone (SEZ) inquired about the tax implications of receiving capital and training subsidies. The response highlighted factors to consider, such as the source, purpose, and obligations associated with the subsidies. Generally, capital subsidies reduce the cost of assets per Section 43 of the Income Tax Act, unless deemed a capital receipt. Training subsidies are typically revenue receipts, reducing training expenses. If training costs are capitalized, subsidies reduce amortized costs. The impact on SEZ units, which may have exemptions, should also be considered.