Any Manufacturing Undertaking or Enterprise Set-Up During the Period From 01.04.2015 to 31.03.2020 in the Aforesaid Backward Areas of Bihar will be Eligible for 15% Additional Depreciation and 15%  Investment Allowance Under the Income-Tax Act, on the Cost of Plant and Machinery Acquired and Installed by it During the Said Period

The provisions of the Income-tax Act 1961 have been amended through Finance Act 2015 to provide certain tax benefits to notified backward areas in specified States including State of Bihar to give these areas an opportunity to grow faster.  To give effect to the amendment, the following 21 districts of Bihar have been notified as Backward Areas vide Notification No. S.O. 2241(E) dated 17.08.2015: 

1.         Patna

2.         Nalanda

3.         Bhojpur

4.         Rohtas

5.         Kaimur

6.         Gaya

7.         Jehanabad

8.         Aurangabad

9.         Nawada

10.       Vaishali

11.       Sheohar

12.       Samastipur

13.       Darbhanga

14.       Madhubani

15.       Purnea

16.       Katihar

17.       Araria

18.       Jamui

19.       Lakhisarai

20.       Supaul

21.       Muzaffarpur

             Any manufacturing undertaking or enterprise set-up during the period from 01.04.2015 to 31.03.2020 in the aforesaid backward areas of Bihar will be eligible for 15% additional depreciation under Section 32(1)(iia) and 15%  investment allowance under Section 32AD of the Income-tax Act, on the cost of plant and machinery acquired and installed by it during the said period. The aforesaid incentives are in addition to other tax benefits available under the Income-tax Act.  Thus a manufacturing undertaking/enterprise set up in any of these areas during the aforesaid period will be eligible for 35% (instead of 20%) of additional depreciation. This would be over and above the normal depreciation of 15%. Besides, a company engaged in manufacturing will also be eligible for 30% (instead of 15%) of investment allowance if its investment in new plant and machinery during the period 1.4.2015 to 31.3.2017 exceeds ₹ 25 crore.

Notification No. S.O. 2241(E) dated 17.08.2015 to this effect is available on the website www.incometaxindia.gov.in.  

Tax incentives for notified backward areas extend enhanced depreciation and investment allowance for new manufacturing projects. Amendments to the Income tax Act grant manufacturing undertakings established in 21 notified backward districts eligibility for 15% additional depreciation and 15% investment allowance on plant and machinery acquired and installed during the specified period; these incentives are in addition to other tax benefits, increase the effective additional depreciation available, and an enhanced investment allowance rate applies to companies investing above a prescribed threshold during an earlier sub period.