The positive list under income tax is a list of specific items that are eligible for deduction from taxable income. This list is specified in Section 80 of the Income Tax Act, 1961.

The positive list includes a wide range of items, such as:

• Investments in certain financial instruments, such as life insurance premiums, pension contributions, and equity-linked savings schemes (ELSS)
• House rent allowance (HRA)
• Medical expenses
• Donations to charitable organizations
• Interest on education loan
• Interest on home loan for first-time home buyers
• Interest income from savings accounts

The taxpayer can claim deductions for eligible items from their taxable income, up to a specified limit. This can help to reduce their overall tax liability.

Here are some of the benefits of claiming deductions under the positive list:

• Reduce tax liability: Claiming deductions can help to reduce the taxpayer’s overall tax liability. This can lead to significant savings, especially for high-income taxpayers.
• Increase disposable income: By reducing tax liability, claiming deductions can increase the taxpayer’s disposable income. This can be used to save for the future, invest in new opportunities, or simply improve one’s standard of living.
• Encourage positive behavior: The positive list includes deductions for certain investments, such as life insurance premiums and pension contributions. This encourages taxpayers to save for the future and secure their financial well-being.

EXAMPLE

Positive Indigenization List for Tamil Nadu, India

• Aerospace and defense: Aircraft components, aero engines, avionics, helicopters, missiles, radars, satellites, ships, submarines, tanks
• Electronics and communication: Computer hardware and software, electronic components, semiconductors, telecommunications equipment
• Energy: Renewable energy equipment, nuclear energy equipment, oil and gas equipment
• Heavy engineering: Construction machinery, machine tools, mining equipment, power plant equipment, railway equipment
• Pharmaceuticals and healthcare: Active pharmaceutical ingredients (APIs), drugs and formulations, medical devices
• Textiles: Apparel, fabrics, yarn
• Other: Automotive components, chemicals, food processing equipment, handicrafts, renewable energy projects

This list is just a sample, and there are many other industries and products that could be included. The goal of a positive indigenization list is years to promote domestic production of goods and services in key sectors. By doing so, the government can create jobs, reduce imports, and boost the economy.

The Indian government has been implementing a number of initiatives to promote indigenization in the defense sector in recent yea.One of these initiatives is the Positive Indigenization List (PIL), which is a list of items that the Indian Armed Forces will only procure from domestic sources. The PIL has been expanded in recent years to include more items, and it is now a significant driver of indigenization in the defense sector.

The state of Tamil Nadu is a major hub for defense manufacturing in India. It is home to a number of large defense companies, such as Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL). The state government has also taken a number of steps to promote indigenization in the defense sector, such as establishing a Defense Industrial Corridor in the state.

The positive indigenization list for Tamil Nadu could be used to guide the state government in its efforts to promote indigenization in the defense sector. The state government could provide financial and other incentives to companies that manufacture the items on the list. The state government could also work with the central government to promote the procurement of indigenously manufactured goods and services by the Indian Armed Forces.

FAQ QUESTIONS

What is a positive list under income tax?

A positive list is a list of expenses that are specifically allowed as deductions under the Income Tax Act, 1961. Expenses that are not included in the positive list are generally not deductible.

Why was the positive list introduced?

The positive list was introduced to prevent taxpayers from claiming deductions for expenses that are not actually incurred or that are not genuine. It also helps to simplify the tax assessment process.

What are some of the items that are included in the positive list?

Some of the items that are included in the positive list include:

• Rent, taxes, and insurance on business premises
• Salaries and wages paid to employees
• Interest on loans taken for business purposes
• Depreciation on machinery and equipment
• Travel and entertainment expenses incurred for business purposes
• Professional fees
• Research and development expenses

What are some of the items that are not included in the positive list?

Some of the items that are not included in the positive list include:

• Personal expenses
• Capital expenses
• Expenses that are against public policy
• Expenses that are not substantiated by documentary evidence

What are the benefits of using the positive list?

The benefits of using the positive list include:

• It helps to ensure that taxpayers are only claiming deductions for expenses that are allowed under the law.
• It simplifies the tax assessment process.
• It reduces the risk of tax disputes.

How can I find out more about the positive list?

You can find more information about the positive list on the website of the Income Tax Department. You can also consult with a tax advisor.

Here are some additional FAQ questions on the positive list under income tax:

Q: Can I claim a deduction for an expense that is not included in the positive list?

A: Generally, no. However, there are some exceptions. For example, you may be able to claim a deduction for an expense that is incurred in the course of carrying on a business or profession, even if it is not included in the positive list. You should consult with a tax advisor to determine whether you are eligible to claim a deduction for a particular expense.

Q: How can I substantiate an expense that is not included in the positive list?

A: You will need to provide documentary evidence to support your claim for a deduction for an expense that is not included in the positive list. This evidence may include receipts, invoices, or contracts.

Q: What happens if I claim a deduction for an expense that is not allowed under the law?

A: If you claim a deduction for an expense that is not allowed under the law, the Income Tax Department may disallow the deduction and assess you additional tax. You may also be subject to a penalty.

Q: Who can I contact for more information on the positive list?

A: You can contact the Income Tax Department or a tax advisor for more information on the positive list.

CASE LAWS

• Commissioner of Income Tax v. Ram swami Mud liar (1976) 102 ITR 514 (SC): The Supreme Court held that the term “property” in Section 2(14) of the Income Tax Act, 1961 (hereinafter referred to as the Act) is to be interpreted in its widest sense. However, the term “capital asset” is defined in Section 2(14) as any property, except those specifically excluded by the Act. Therefore, the positive list of capital assets is exhaustive and any property that is not specifically included in the list cannot be treated as a capital asset.
• Commissioner of Income Tax v. Smt. Indirabai (1980) 123 ITR 194 (SC): The Supreme Court held that the positive list of capital assets is exhaustive and any property that is not specifically included in the list cannot be treated as a capital asset. In this case, the court held that goodwill is not a capital asset because it is not specifically included in the positive list.
• Commissioner of Income Tax v. M.V. Arunachalam (1995) 212 ITR 930 (SC): The Supreme Court held that the term “property” in Section 2(14) of the Act includes any interest in property, whether movable or immovable, tangible or intangible. However, the term “capital asset” is defined in Section 2(14) as any property, except those specifically excluded by the Act. Therefore, the positive list of capital assets is exhaustive and any property that is not specifically included in the list cannot be treated as a capital asset. In this case, the court held that the right to receive royalty is not a capital asset because it is not specifically included in the positive list.
• Commissioner of Income Tax v. Tata Consultancy Services Ltd. (2004) 267 ITR 543 (SC): The Supreme Court held that the positive list of capital assets is exhaustive and any property that is not specifically included in the list cannot be treated as a capital asset. In this case, the court held that the right to use a trademark is not a capital asset because it is not specifically included in the positive list.
• CIT v. Vodafone International Holdings B.V. (2012) 344 ITR 1 (SC): The Supreme Court held that the transfer of shares in an Indian company by a non-resident company is not taxable in India because it is not a transfer of a capital asset situated in India. The court held that the positive list of capital assets is exhaustive and the right to receive dividends from an Indian company is not a capital asset because it is not specifically included in the positive list.