Union Budget 2023-24 + FINANCE Bill, 2023

C. Ease of Compliance

Ease in claiming deduction on amortization of preliminary expenditure

Section 35D of the Act provides for amortization of certain preliminary expenses which are incurred prior to the commencement of business or after commencement, in connection with extension of undertaking or setting up of a new unit. This includes expenditure in connection with preparation of feasibility report, project report etc.

2. The section inter-alia provides that the work in connection with the preparation of feasibility report or the project report or the conducting of market survey or of any other survey or the engineering services would need to be carried out either by the assessee himself or by a concern which is approved by the Board.

3. In order to ease the process of claiming amortization of these preliminary expenses it is proposed to amend section 35D of the Act to remove the condition of activity in connection with these expenses to be carried out by a concern approved by the Board. Instead, the assessee shall be required to furnish a statement containing the particulars of this expenditure within prescribed period to the prescribed income-tax authority in the prescribed form and manner.

4. This amendment will take effect from 1st April, 2024 and will accordingly apply to the assessment year 2024-2025 and subsequent assessment years.

[clause 12]

 

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Full Text:

Union Budget 2023-24 + FINANCE Bill, 2023

Amortization of preliminary expenditure: approval requirement removed; assessee must file prescribed statement to claim deduction. Amendment removes the Board approval requirement for entities performing preparatory activities tied to amortization of preliminary expenditure and replaces it with a requirement that the assessee furnish a prescribed statement containing particulars of such expenditure to the prescribed income tax authority within the prescribed period and form; effective from 1 April 2024 for the relevant assessment year.