Section 138: deduction for profits of industrial undertakings/enterprises in infrastructure development, etc.

What Section 138 provides

Where, for a tax year, an assessee's gross total income includes profits and gains derived by an undertaking or enterprise from a business referred to in Section 80-IA of the Income-tax Act, 1961, and the assessee is eligible to claim a deduction from those profits under that section (as if the 1961 Act had not been repealed), a deduction is allowed in computing total income, subject to two conditions.

• The amount of the deduction is calculated as per the provisions of Section 80-IA of the Income-tax Act, 1961.
• The deduction is allowed only for such tax years as would have been allowed under Section 80-IA of the Income-tax Act, 1961, had that Act not been repealed.

What this means in practice

Section 138 does not create new eligibility conditions of its own - it is a continuity provision. The scope of eligible businesses, the quantum of deduction, and the number of years for which it can be claimed are all governed by the mechanism of the old, repealed Section 80-IA of the Income-tax Act, 1961, not by fresh conditions in the 2025 Act itself.

Frequently asked questions