Section 80HHF of Income Tax Act for AY 2023-24

Section 80HHF of Income Tax Act amended by Finance Act and IT Rules. Deduction for profits and gains from export or transfer of film software.

Amended and updated notes on section 80HHF of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to deduction in respect of profits and gains from export or transfer of film software, etc.

Chapter VIA (Sections 80A to 80U) of the Income Tax Act 1961 deals with the provisions related to deductions to be made in computing total income. Section 80HHF of IT Act 1961-2023 provides for deduction in respect of profits and gains from export or transfer of film software, etc.

Recently, we have discussed in detail section 80HHE (deduction in respect of profits from export of computer software, etc.) of IT Act 1961. Today, we learn the provisions of section 80HHF of Income-tax Act 1961. The amended provision of section 80HHF is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 80HHF of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.

Section 80HHF: Deduction in respect of profits and gains from export or transfer of film software

Section 80HHF(1) of Income Tax Act

Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export or transfer by any means out of India, of any film software, television software, music software, television news software, including telecast rights (hereafter in this section referred to as the software or software rights), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction to the extent of profits, referred to in sub-section (1A), derived by the assessee from such business.

Section 80HHF(1A) of Income Tax Act

For the purposes of sub-section (1), the extent of deduction of profits shall be an amount equal to—

  • (i) eighty per cent of such profits for an assessment year beginning on the 1st day of April, 2001;
  • (ii) seventy per cent thereof for an assessment year beginning on the 1st day of April, 2002;
  • (iii) fifty per cent thereof for an assessment year beginning on the 1st day of April, 2003;
  • (iv) thirty per cent thereof for an assessment year beginning on the 1st day of April, 2004,

and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year.

Section 80HHF(2) of Income Tax Act

The deduction specified in sub-section (1) shall be allowed only if the consideration in respect of the software or software rights referred to in that sub-section is received in, or brought into, India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf.

Section 80HHF(3) of Income Tax Act

For the purposes of sub-section (1), profits derived from the business referred to in that sub-section shall be the amount which bears to the profits of the business, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee.

Section 80HHF(4) of Income Tax Act

The deduction under sub-section (1) shall not be admissible unless the assessee furnishes in the prescribed form, along with the return of income, the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.

Section 80HHF(5) of Income Tax Act

Where a deduction under this section is claimed and allowed in respect of profits of the business referred to in sub-section (1) for any assessment year, no deduction shall be allowed in relation to such profits under any other provision of this Act for the same or any other assessment year.

Section 80HHF(6) of Income Tax Act

Notwithstanding anything contained in this section, no deduction shall be allowed in respect of the software or software rights referred to in sub-section (1), if such business is prohibited by any law for the time being in force.

Explanation: For the purposes of this section,—

  • (a) “competent authority” means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange;
  • (b) “convertible foreign exchange” shall have the meaning assigned to it in clause (a) of the Explanation to section 80HHC;
  • (c) “export turnover” means the consideration in respect of the software or software rights specified in clauses (d), (e), (g), (h) and (i), received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (2), but does not include freight, telecommunication charges or insurance attributable to the delivery of such software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India;
  • (d) “film software” means a copy of a cinematograph film made by any process analogous to cinematography on acetate polyester or celluloid film positive, magnetic tape, digital media or other optical or magnetic devices and certified by the Board of film certification constituted by the Central Government under section 3 of the Cinematograph Act, 1952 (37 of 1952);
  • (e) “music software” includes series of sounds or music recorded on magnetic tape, cassette, compact discs and digital media which can be played or reproduced on any appropriate apparatus;
  • (f) “profits of the business” means the profits of the business as computed under the head “Profits and gains of business or profession” as reduced by—
    • (A) ninety per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and
    • (B) the profits of any branch, office, warehouse or any other establishment of the assessee situated outside India;
  • (g) “telecast rights” means a licence or contract to exhibit motion pictures or television programmes over a television network either through terrestrial transmission or through a satellite broadcast in a specified territory;
  • (h) “television news software” means a collection of sounds and images, reportage, data and voice of actualities broadcast either through terrestrial transmission, wire or satellite, live or pre-recorded on video cassettes or digital media;
  • (i) “television software” means any programme or series of sounds and images recorded on film or tape or digital media or broadcast through terrestrial transmitter, satellite or any other means of diffusion;
  • (j) “total turnover” shall not include—
    • (A) any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28;
    • (B) any freight, telecommunication charges or insurance attributable to the delivery of the film software, music software, telecast rights, television news software, or television software as defined in clause (d), (e), (g), (h) or (i), as the case may be, outside India;
    • (C) expenses, if any, incurred in foreign exchange in providing the technical services outside India.

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