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Deduction u/s 80JJA: Profit & Gains from business of collecting and processing of Bio-degradable waste

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See the related post: Deductions under Chapter VIA

Deduction under section 80JJA

Introduction-
Deduction u/ 80JJA is available to an assessee, who engage in the business of collecting and processing or treating of bio-degradable waste for generating power or producing bio-fertilizers, bio-pesticides or other biological agents or for producing bio-gas or making pellets or briquettes for fuel or organic manure etc.
Biodegradable Waste-
Biodegradable waste is an organic waste like food materials, kitchen wastes and other natural wastes which can get decomposed by certain micro-organisms like bacteria, fungi, and others, under certain temperature and environment into useful gases for fuel and the remains of the process can be used as fertilizers.

Biodegradable waste is used for the following purposes-
  • Generation of Power
  • Production of bio-fertilizers
  • Production of bio-pesticides
  • Production of bio-gas
  • Production of pellets or briquettes
  • Production of organic manure

Amount of Deduction- The deduction is available of an amount equal to the whole of such profits and gains from such business or Rs. 5,00,000 whichever is less. The deduction is available for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which such business commences.
Example-
Mr. X has set up project of Bio-degradable, he earn Rs. 4,50,000 as profit during the year 2017-18. His other income is Rs. 2,30,000. What will be the deduction amount under section 80JJA?
Answer-
Mr. X has income from such business is Rs. 4,50,000, so he is eligible for deduction u/s 80JJA for Rs. 4,50,000 (Whole amount of Profit) or Rs. 5,00,000 whichever is less.
Mr. X has total income as below-
Particulars Amount (Rs.)
Income from Business or Profession 4,50,000
Income from Other Sources 2,30,000
Total Income 6,80,000
Less: Deduction u/s 80JJA 4,50,000
Total Taxable Income 2,30,000

Note- Mr. X can avail deduction up to 5 year starting from 2017-18 on profits from such business or Rs. 5,00,000 whichever is less.

 
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