Amortization of Preliminary Expenses in the Income Tax Bill, 2025: Clause 44 vs. Section 35D

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....ax Bill, 2025, introduces provisions for the amortization of certain preliminary expenses incurred by Indian companies or resident individuals before the commencement of business or in connection with the extension or establishment of a new unit. This clause is significant as it provides a structured framework for deducting such expenses over a specified period, thereby offering tax relief to busi....

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....duct one-fifth of specified preliminary expenses over five successive tax years. * Sub-section (2): Enumerates the types of expenditures eligible for amortization, including feasibility reports, project reports, market surveys, engineering services, legal charges, and specific company-related expenses. * Sub-section (3): Requires the furnishing of a statement detailing the expenditure to the p....

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....sinesses and tax professionals. Companies must ensure compliance by maintaining detailed records of preliminary expenses and adhering to the prescribed reporting requirements. The provision also necessitates strategic planning to optimize tax benefits, particularly in deciding between project cost and capital employed for calculating the deduction limit. Comparative Analysis with Section 35D of I....