Sections 143 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 143 to 145 finish the run of area- and activity-based deductions that start in Part C of Chapter VIII. Section 143 gives a deduction of hundred per cent of profits for ten consecutive tax years to certain undertakings in the North-Eastern States. Section 144 allows a deduction to newly established units in a Special Economic Zone, calculated by reference to a section of the Income-tax Act, 1961 that the Act names. Section 145 allows the whole of the profits of a bio-degradable waste business for five years. This article reads the three sections as per the Income-tax Act, 2025 as amended by the Finance Act, 2026; later amendments, rules and notifications should be checked. For help with these claims, see our tax planning advisory.
Section 143: hundred per cent of profits for ten consecutive tax years from the initial tax year, for an undertaking that began (or substantially expanded, or began an eligible business) in a North-Eastern State between 1 April 2007 and before 1 April 2017. Section 144: an entrepreneur who begins to manufacture, produce or provide services in a Special Economic Zone gets a deduction calculated as per section 10AA of the Income-tax Act, 1961, only for the tax years that section would have allowed. Section 145: the whole of the profits of a bio-degradable waste business for five consecutive tax years.
Section 143: undertakings in the North-Eastern States
Sub-section (1): the deduction
Where the gross total income of an assessee includes profits and gains derived by an undertaking, to which the section applies, from any business referred to in sub-section (2), a deduction of an amount equal to hundred per cent of the profits and gains derived from the business is allowed for ten consecutive tax years commencing with the initial tax year.
Sub-section (2): which undertakings
The section applies to an undertaking which, during the period beginning on 1 April 2007 and ending before 1 April 2017, has begun or begins, in any of the North-Eastern States:
- (a) to manufacture or produce any eligible article or thing; or
- (b) to undertake substantial expansion to manufacture or produce any eligible article or thing; or
- (c) to carry on any eligible business.
Sub-sections (3) to (7): conditions and limits
- Sub-section (3). The undertaking must fulfil all of these: (a) it is not formed by splitting up, or reconstruction, of a business already in existence (other than an undertaking formed by re-establishment, reconstruction or revival of the business of an undertaking referred to in section 140(4), in the circumstances and within the period there specified); and (b) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
- Sub-section (4). For (3)(b), section 140(5) and (6) apply (the rule on imported machinery and the 20% allowance on previously used plant).
- Sub-section (5). Irrespective of anything else in the Act, no deduction is allowed under any other section of Chapter VIII in relation to the profits and gains of the undertaking.
- Sub-section (6). No deduction is allowed to any undertaking under the section where the total period of deduction, inclusive of the period under the section or under the second proviso to section 80-IB(4) of the Income-tax Act, 1961, exceeds ten tax years. (The 1961 Act reference is quoted as printed.)
- Sub-section (7). Section 140(7) to (15) apply, so far as may be, to the eligible undertaking under section 143. These are the rules on computing profits as the only source of income, audit before the specified date in section 63, market value of transfers, close connection, and the Central Government's power of withdrawal; see our article on section 140.
Sub-section (8): definitions
| Term | Meaning |
|---|---|
| Eligible article or thing | Any article or thing other than: (i) goods in Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 (tobacco and manufactured tobacco substitutes); (ii) pan masala as covered under Chapter 21 of that Schedule; (iii) plastic carry bags of less than twenty microns as specified by the Ministry of Environment and Forests by notifications dated 2 September 1999 and 17 June 2003; and (iv) goods in Chapter 27 of that Schedule produced by petroleum oil or gas refineries |
| Eligible business | The business of (i) a hotel (not below two star category); (ii) adventure and leisure sports including ropeways; (iii) a nursing home providing medical and health services with a minimum capacity of twenty-five beds; (iv) running an old-age home; (v) operating a vocational training institute for hotel management, catering and food craft, entrepreneurship development, nursing and para-medical, civil aviation related training, fashion designing and industrial training; (vi) running an information technology related training centre; (vii) manufacturing of information technology hardware; and (viii) bio-technology |
| Initial tax year | The tax year in which the undertaking begins to manufacture or produce articles or things, or completes substantial expansion |
| North-Eastern States | Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura |
| Substantial expansion | Increase in the investment in plant and machinery by at least 25% of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the tax year in which the substantial expansion is undertaken |
The Central Excise Tariff Act, 1985 is another law; check it for the Chapters named.
Example (invented). Barak Valley Foods Ltd. began manufacturing an eligible article at a unit in Assam during the period from 1 April 2007 to before 1 April 2017. The tax year in which it began manufacturing is its initial tax year. For that year and the nine following (ten consecutive tax years in all) it may deduct hundred per cent of the profits of the undertaking. If profits for a tax year are Rs. 18,00,000, the deduction is Rs. 18,00,000 for that year, and under sub-section (5) no deduction is allowed under another section of Chapter VIII on those profits.
Example on substantial expansion (invented). A unit's plant and machinery has a book value, before depreciation in any year, of Rs. 2,00,00,000 on the first day of the tax year. A 25% increase is Rs. 50,00,000. Investment of Rs. 50,00,000 or more in the year meets the definition; an increase of Rs. 40,00,000 (20%) does not.
Section 144: newly established units in Special Economic Zones
Section 144 applies "in respect of any tax year" where:
- (a) in computing the total income of an assessee, being an entrepreneur as referred to in section 2(j) of the Special Economic Zones Act, 2005, who begins to manufacture or produce articles or things or provide any services, as referred to in section 10AA of the Income-tax Act, 1961; and
- (b) the assessee is eligible to claim a deduction from the profits and gains derived from the export of such articles or things or from services for the tax year under the provisions of that section, "if the said Act had not been repealed",
a deduction is allowed from the profits and gains derived from such business, subject to two conditions: (i) the amount is calculated as per section 10AA of the Income-tax Act, 1961; and (ii) the deduction is allowed only for such tax years as would have been allowed under that section, as if the said Act had not been repealed.
The two statutes are named as printed. The 2025 Act does not repeat the rate, the number of years or the conditions of the named section; they are not in the text consulted. The Special Economic Zones Act, 2005 is another law; check it for the meaning of "entrepreneur".
Example (invented). Delta Exports Pvt. Ltd. is an entrepreneur who has begun to manufacture articles in a Special Economic Zone and is eligible, for a tax year, under the named section for export profits. The deduction computed under the named section is Rs. 22,00,000 (assumed). Section 144 allows Rs. 22,00,000, but only for tax years the named section would have allowed.
Section 145: bio-degradable waste
If the gross total income includes profits and gains from the business of collecting and processing or treating bio-degradable waste for:
- (a) generating power; or
- (b) producing bio-fertilizers, bio-pesticides or other biological agents; or
- (c) producing bio-gas; or
- (d) making pellets or briquettes for fuel or organic manure,
a deduction equal to the whole amount of such profits and gains is allowed for five consecutive tax years, beginning with the tax year in which the business commences.
Example (invented). Greenloop Waste Pvt. Ltd. begins collecting and processing bio-degradable waste for making bio-gas in a tax year. Its profits are Rs. 9,00,000 in that year. The deduction is the whole Rs. 9,00,000, and the same rule applies for the next four tax years, five in all. Section 145 prints no conditions on turnover, location or approval.
The three sections side by side
| Point | Section 143 | Section 144 | Section 145 |
|---|---|---|---|
| Who | Undertaking in a North-Eastern State | Entrepreneur with a newly established unit in a Special Economic Zone | Business of collecting and processing or treating bio-degradable waste |
| Amount | Hundred per cent of profits | As calculated per the named section | Whole amount of profits |
| Period | Ten consecutive tax years from the initial tax year | Only the tax years the named section would have allowed | Five consecutive tax years from the tax year the business commences |
| Start window | 1 April 2007 to before 1 April 2017 | None printed in section 144 | None printed |
| Other deductions | Barred under Chapter VIII (sub-section (5)) | Not stated in section 144 | Not stated in section 145 |
The overall limit in section 122(2) still applies; see the live note on section 122. For the related deductions see our articles on sections 141 and 142 and on section 146.
Need help with an area or activity-based deduction?
These deductions turn on dates, locations and, for section 144, on a section the Act names. Our tax planning advisory team can help you test the dates and conditions against sections 143 to 145 before you claim.
Key takeaways
- Section 143 gives hundred per cent of profits for ten consecutive tax years to qualifying undertakings that began in a North-Eastern State between 1 April 2007 and before 1 April 2017.
- Substantial expansion means an increase of at least 25% in the book value of plant and machinery.
- Section 144 ties the deduction for newly established Special Economic Zone units to section 10AA of the Income-tax Act, 1961 as the Act prints.
- Section 145 allows the whole of the profits of a bio-degradable waste business for five consecutive tax years.
- Section 143(5) bars other Chapter VIII deductions on the undertaking's profits.
Read next
- Section 146: deduction for additional employee cost
- Sections 141–142: certain industrial undertakings and housing projects
- Section 140: deduction for eligible start-ups
- Income-tax Act 2025 Chapter VIII
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.