Investment deduction

Investment Deduction – Investment deduction is a tax benefit that allows businesses to deduct a portion of the cost of qualifying investments—such as new machinery, equipment, or facilities—from their taxable income. This deduction reduces the overall tax liability, providing an incentive for capital investment. Key Points: Encourages businesses to invest in productive assets. Applies only to eligible assets specified by tax regulations. Helps reduce taxable income, thereby lowering taxes payable. Supports economic growth and modernization of industries. Example: A company invests ₹20 lakh in eligible machinery. If the investment deduction rate is 20%, it can deduct ₹4 lakh from its taxable income, lowering its total tax liability