PGBP: Amendment in section 32AC

Amendment applicable from May, 2015 attempt

Section 32AC: Investment allowance to manufacturing companies

For the purpose of encouraging the companies engaged in the business of manufacture or production of any article, the Finance Act 2013 introduced section 32AC. Sub-section(1) of section 32AC provides that where a manufacturing company invests an amount of more than Rs. 100 crore in new plant and machinery during the period beginning from April 1, 2013 and ending on March 31, 2015, then the assessee shall be allowed a deduction of 15% of cost of new assets for assessment years 2014-15 and 2015-16. It is over and above depreciation available u/s 32.

Amendment: As manufacturing sector growth is important for development of economy and generation of employment, the above benefit has been extended by incorporating section 32AC(1A) with effect from the assessment year 2015-16. Under section 32AC(1A), investment allowance will be available if the aggregate amount of actual cost of new plant and machinery acquired and installed by a manufacturing company during a previous year in excess of Rs. 25 crore. The amount of investment allowance will be 15% of actual cost of new asset acquired and installed during the previous year. This deduction will be available for the assessment year 2015-16 to 2017-18. Though, no deduction will be available for the assessment year 2015-16 under section 32AC(1A) to a company which is eligible for deduction u/s 32AC(1).

	Previous year
	2013-14	2014-15	2015-16	2016-17	2017-18
Case I: Cost of new plant and machinery acquired and installed	80	40	-	-	-
Deduction u/s 32AC(1)	-	18	-	-	-
Deduction u/s 32AC(1A)	-	-	-	-	-
Case 2: Cost of new plant and machinery acquired and installed	30	90	-	-	-
Deduction u/s 32AC(1)	-	18	-	-	-
Deduction u/s 32AC(1A)	-	-	-	-	-
Case 3: Cost of new plant and machinery acquired and installed	140	10	-	-	-
Deduction u/s 32AC(1)	21	1.5	-	-	-
Deduction u/s 32AC(1A)	-	-	-	-	-
Case 4: Cost of new plant and machinery acquired and installed	60	40	-	-	-
Deduction u/s 32AC(1)	-	-	-	-	-
Deduction u/s 32AC(1A)	-	6	-	-	-
Case 5: Cost of new plant and machinery acquired and installed	75	25	-	-	-
Deduction u/s 32AC(1)	-	-	-	-	-
Deduction u/s 32AC(1A)	-	-	-	-	-
Case 6: Cost of new plant and machinery acquired and installed	75	26	-	-	-
Deduction u/s 32AC(1)	-	15.15	-	-	-
Deduction u/s 32AC(1A)	-	-	-	-	-
Case 7: Cost of new plant and machinery acquired and installed	-	120	25	26	27
Deduction u/s 32AC(1)	-	18	-	-	-
Deduction u/s 32AC(1A)	-	-	-	3.9	-
Case 8: Cost of new plant and machinery acquired and installed	120	20	30	40	50
Deduction u/s 32AC(1)	18	3	-	-	-
Deduction u/s 32AC(1A)	-	-	4.5	6	-
Case 9: Cost of new plant and machinery acquired and installed	-	-	25	130	470
Deduction u/s 32AC(1)	-	-	-	-	-
Deduction u/s 32AC(1A)	-	-	-	19.5	-
Case 10: Cost of new plant and machinery acquired and installed	100	4	400	10	600
Deduction u/s 32AC(1)	-	15.6	-	-	-
Deduction u/s 32AC(1A)	-	-	60	-	-
Case 11: Cost of new plant and machinery acquired and installed	100	25	25	25	25
Deduction u/s 32AC(1)	-	18.75	-	-	-
Deduction u/s 32AC(1A)	-	-	-	-	-