Special provisions in respect of certain undertakings in North-Eastern States
[Section-143 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 143(1) of Income Tax Act 2025
143(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking, to which this section applies, from any business referred to in sub-section (2), there shall be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100% of the profits and gains derived from such business for ten consecutive tax years commencing with the initial tax year.
Section 143(2) of Income Tax Act 2025
143(2) This section applies to any undertaking which has, during the period beginning on the 1st April, 2007 and ending with the 1st April, 2017, begun or begins, in any of the North-Eastern States,—
- (a) to manufacture or produce any eligible article or thing;
- (b) to undertake substantial expansion to manufacture or produce any eligible article or thing; and
- (c) to carry on any eligible business.
Section 143(3) of Income Tax Act 2025
143(3) This section applies to any undertaking which fulfils all the following conditions:—
- (a) it is not formed by splitting up, or the reconstruction, of a business already in existence;
- (b) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose;
- (c) condition referred to in clause (a) shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 140(4),in the circumstances and within the period specified therein.
Section 143(4) of Income Tax Act 2025
143(4) For the purposes of sub-section (3)(b), the provisions of section 140(5) and (6) shall apply.
Section 143(5) of Income Tax Act 2025
143(5) Irrespective of anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in this Chapter in relation to the profits and gains of the undertaking.
Section 143(6) of Income Tax Act 2025
143(6) Irrespective of anything contained in this Act, no deduction shall be allowed to any undertaking under this section, where the total period of deduction inclusive of the period of deduction under this section or under second proviso to section 80-IB(4) of the Income-tax Act, 1961 exceeds ten tax years.
Section 143(7) of Income Tax Act 2025
143(7) The provisions contained in section 140(7) to (15) shall, so far as may be, apply to the eligible undertaking under this section.
Section 143(8) of Income Tax Act 2025
143(8) In this section,—
- (a) “eligible article or thing” means the article or thing other than the following:—
- (i) goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985, which pertains to tobacco and manufactured tobacco substitutes;
- (ii) pan masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985;
- (iii) plastic carry bags of less than twenty microns as specified by the Ministry of Environment and Forests vide notification numbers S.O. 705(E), dated the 2nd September, 1999 and S.O. 698(E), dated the 17th June, 2003; and
- (iv) goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985, produced by petroleum oil or gas refineries;
- (b) “eligible business” means the business of—
- (i) hotel (not below two star category);
- (ii) adventure and leisure sports including ropeways;
- (iii) providing medical and health services in the nature of nursing home with a minimum capacity of twenty-five beds;
- (iv) running an old-age home;
- (v) operating 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 information technology related training centre;
- (vii) manufacturing of information technology hardware; and
- (viii) bio-technolog;
- (c) “initial tax year” means the tax year in which the undertaking begins to manufacture or produce articles or things, or completes substantial expansion;
- (d) “North-Eastern States” means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;
- (e) “substantial expansion” means increase in the investment in the 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.
FAQs on Section 143 of Income Tax Act 2025
What is the objective of Section 143 of the Income Tax Act, 2025?
To provide a 100% deduction on profits and gains from eligible undertakings in the North-Eastern States for a period of ten consecutive tax years.
Which undertakings are covered under Section 143?
Undertakings that began or begin eligible activities in the North-Eastern States between 1st April 2007 and 1st April 2017.
What kinds of activities qualify under Section 143(2)?
Manufacture or production of eligible articles or things, substantial expansion of such manufacturing, and eligible businesses as defined.
What is the deduction allowed under Section 143(1)?
100% of the profits and gains derived from the eligible business for ten consecutive tax years.
What is the initial tax year under Section 143?
The year in which the undertaking begins manufacturing or production, or completes substantial expansion.
Which States are considered North-Eastern States under this section?
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura.
What are the conditions an undertaking must meet under Section 143(3)?
It should not be formed by splitting up or reconstructing an existing business, or by transferring old machinery or plant, except in specific revival circumstances under Section 140(4).
What is substantial expansion as per Section 143(8)(e)?
An increase of at least 25% in the investment in plant and machinery (before depreciation) during the relevant tax year.
Can an undertaking claim deduction under any other section for the same profits?
No, as per Section 143(5), no deduction is allowed under any other section of the Chapter for the same profits.
Is there any restriction on the total period of deduction under this section and prior law?
Yes, as per Section 143(6), the total deduction period under this section and under the second proviso to section 80-IB(4) of the 1961 Act cannot exceed ten tax years.
What types of articles or things are excluded from the benefit?
Tobacco and its substitutes, pan masala, plastic carry bags under 20 microns, and goods from petroleum refineries.
What businesses are considered eligible businesses under this section?
Hotels (minimum two-star), adventure and leisure sports (including ropeways), medical and health services (minimum 25-bed nursing homes), old-age homes, vocational training institutes, IT training centres, IT hardware manufacturing, and biotechnology.
What is the implication of Section 143(7)?
The provisions of Section 140(7) to (15) also apply to eligible undertakings under Section 143.
Do provisions relating to transfer of used machinery apply here?
Yes, Section 143(4) states that Section 140(5) and (6) provisions apply for determining if an undertaking is formed with used machinery.
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