Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone
[Section-139 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
In respect of any tax year, where––
- (a) the gross total income of an assessee, being a Developer, includes any profits and gains derived by an undertaking or an enterprise from any business of developing a Special Economic Zone, notified on or after the 1st April, 2005 under the Special Economic Zones Act, 2005 referred to in section 80-IAB of the Income-tax Act, 1961; and
- (b) such assessee is eligible to claim a deduction from the profits and gains derived from such business for such tax year under the provisions of the said section, if the said Act had not been repealed,
there shall be allowed, in computing the total income of the assessee, a deduction from the profits and gains derived from such business, subject to the conditions that—
- (i) the amount of deduction is calculated as per the provisions of section 80-IAB of the Income-tax Act, 1961; and
- (ii) the deduction under this Act shall be allowed only for such tax years, as would have been allowed under section 80-IAB of the Income-tax Act, 1961, if the said Act had not been repealed.
FAQs on Section 139 of Income Tax Act 2025
What is Section 139 of the Income Tax Act, 2025 about?
Section 139 provides for deductions in respect of profits and gains derived by a Developer from developing a Special Economic Zone (SEZ), provided certain conditions are met.
Who is eligible for deduction under Section 139?
Only assessees who are Developers engaged in the business of developing SEZs notified on or after April 1, 2005, are eligible.
Is the SEZ required to be notified under a specific Act?
Yes, the SEZ must be notified under the Special Economic Zones Act, 2005.
Can a deduction be claimed under this section if the SEZ was notified before April 1, 2005?
No, only SEZs notified on or after April 1, 2005, are covered.
Is the deduction available to all types of businesses operating in SEZs?
No, the deduction is specifically available only to Developers engaged in developing SEZs.
Does the assessee need to have derived profits and gains from a specific business activity?
Yes, the profits and gains must be derived from the business of developing a Special Economic Zone.
How is the deduction amount determined under Section 139?
The deduction is calculated in the same manner as was prescribed under section 80-IAB of the Income-tax Act, 1961.
For how many years is the deduction allowed under this section?
The deduction is allowed only for such tax years as would have been allowed under section 80-IAB of the 1961 Act, had it not been repealed.
Does the new Act (2025) independently specify the deduction period or rates?
No, it refers to the provisions of the repealed section 80-IAB for determining the amount and period of deduction.
What happens if the Developer has already exhausted the deduction period under the 1961 Act?
In such a case, no deduction would be allowed under the 2025 Act, as it mirrors the eligibility and time limits of the repealed section 80-IAB.
Is this deduction automatic or subject to conditions?
It is subject to conditions, including eligibility and the computation mechanism as per the repealed law.
Does this section revive any repealed provisions?
It does not revive the repealed section 80-IAB but allows deduction as if the section were still in force.
Can enterprises other than Developers claim deduction under this section?
No, only Developers are eligible for the deduction under Section 139.
Is any separate notification required under this section for eligibility?
No separate notification is mentioned, but the SEZ must already be notified under the SEZ Act, 2005.
Is there a cap on the amount of deduction under this section?
The cap or quantum is not directly mentioned in this section but is to be determined as per section 80-IAB of the 1961 Act.
Are both individual and corporate Developers eligible for this deduction?
Yes, as long as the assessee qualifies as a Developer and meets the specified conditions.
What if the SEZ business is not the only source of income?
Only the profits and gains derived from the SEZ development business are eligible for deduction under this section.
Is the deduction under Section 139 part of total income computation or post-total income?
The deduction is allowed while computing the total income of the assessee.
Can an assessee claim this deduction if they are only operating an SEZ and not developing it?
No, the deduction is allowed only to those engaged in developing a Special Economic Zone.
Does the Act specify how to substantiate the claim of deduction?
While Section 139 itself doesn’t specify documentation, adherence to past requirements under section 80-IAB would be necessary.
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