Special provisions in respect of newly established Units in Special Economic Zones
[Section-144 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
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 referred to in section 10AA of the Income-tax Act, 1961; and
- (b) such 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or things or from services for such tax year under the provisions of the said section, if the said Act had not been repealed,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 10AA 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such tax years, as would have been allowed under section 10AA of the Income-tax Act, 1961, if the said Act had not been repealed.
FAQs on Section 144 of Income Tax Act 2025
Who is eligible to claim deduction under Section 144 of the Income Tax Act, 2025?
An assessee who is an entrepreneur as defined in section 2(j) of the Special Economic Zones Act, 2005, and who begins to manufacture or produce articles or provide services in a Special Economic Zone.
What is the nature of the deduction allowed under Section 144?
It is a deduction from profits and gains derived from the export of articles, things, or services from a SEZ unit.
Does the deduction apply only to exports?
Yes, the deduction is available only in respect of profits and gains derived from exports.
How is the amount of deduction under Section 144 calculated?
The deduction is calculated in accordance with the provisions of section 10AA of the Income-tax Act, 1961, as if that Act had not been repealed.
Is the deduction under Section 144 automatic for all SEZ units?
No, only those SEZ units that would have qualified under section 10AA of the repealed Act are eligible.
Is there a time limit for claiming the deduction under Section 144?
Yes, the deduction is allowed only for the number of tax years for which it would have been allowed under section 10AA of the repealed Income-tax Act, 1961.
From which tax year does Section 144 become applicable?
It is applicable from the tax year beginning on or after 1st April, 2026.
Does Section 144 provide a new deduction structure?
No, it continues the same deduction structure as section 10AA of the repealed Act, subject to eligibility.
What is the objective of Section 144?
To preserve the deduction benefits for eligible SEZ units that would have otherwise continued under the repealed section 10AA.
Do SEZ units established before 1st April, 2026 qualify under Section 144?
Yes, if they begin manufacturing, production, or services in accordance with the conditions specified and would have been eligible under section 10AA.
Are domestic sales by SEZ units eligible for deduction under Section 144?
No, only export profits are eligible for deduction.
Does Section 144 require any special approval or registration?
The assessee must qualify as an entrepreneur under the SEZ Act and satisfy the conditions of section 10AA as previously applicable.
Can a unit claim deduction under both Section 144 and any other section?
The unit can claim deduction under Section 144 only to the extent permitted and must comply with all relevant provisions. Double deduction is not allowed.
Is the deduction under Section 144 available if the SEZ unit relocates?
The deduction depends on continued eligibility and export activity as per conditions under section 10AA of the repealed Act.
What happens if the SEZ unit ceases export activities?
The deduction under Section 144 will not be available for tax years in which export conditions are not met.
Is the deduction under Section 144 available to units set up in non-SEZ areas?
No, only units established in Special Economic Zones are eligible.
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