Question

1. In the context of investment appraisal, discuss how accelerated tax allowances might influence decision making by companies.   Max. words 200

Answer 1

Accelerated Tax Allowances : Accelerated tax allowances is the allowances provided by the state of Land for promotion of certain industries in the initial phase of any business organisation. These Allowances are in terms of investments in machineries, employment of no. of labour ( either unskilled, Skilled). The basic intent behind that is use of indigenous material, machinery so that protect the domestic industries. It helps to circulate the maintenance of small industries as well as promoting new industries in the market. Secondly they can be in the form of particular region wise also. So it means looking for development on overall basis. In Case of pointing employment of Unskilled or skilled labour in number for a particular years will help to target the unemployment within the state.

Above can be understand with the help of example. State has provided the profit for first five years will be treated as NIL or Non taxabable only if They have started investing or operating solar generating unit in particular regions.. WIth the operations started in those particluar region, industry operating with solar generating units in particular state will be benefitted with tax allowance for first five operating years. Hence with this allowance it will promote new industrialist to see the opportunity offerred by state in running solar operating as business units, along with that development of particular region will also upgraded.