Section 139
Section 139: profit deduction for a Special Economic Zone Developer
Section 139 is a carry-forward provision. It lets a Developer of a Special Economic Zone (notified on or after 1 April 2005 under the Special Economic Zones Act, 2005) continue claiming the profit deduction it was already entitled to under section 80-IAB of the repealed Income-tax Act, 1961 - but only for the years and amounts that would have been allowed under that old section, calculated exactly as that section prescribed.
What Section 139 does
Where an assessee, being a Developer, has gross total income that includes profits and gains derived from the business of developing a notified Special Economic Zone as referred to in section 80-IAB of the Income-tax Act, 1961, and the assessee was eligible to claim a deduction under that section (as if it had not been repealed), a deduction from those profits and gains is allowed in computing total income under the 2025 Act.
How the deduction is worked out
The deduction is not recalculated afresh under the new Act - it borrows entirely from the old, repealed provision:
- The amount of the deduction is calculated exactly as per section 80-IAB of the Income-tax Act, 1961.
- The deduction is allowed only for the tax years for which it would have been allowed under section 80-IAB of the Income-tax Act, 1961, as if that Act had not been repealed - i.e. it does not extend or restart the eligibility period.
Frequently asked questions
Does Section 139 create a new deduction for SEZ Developers?
No. It only continues the deduction a Developer was already entitled to under section 80-IAB of the Income-tax Act, 1961, for whatever remains of that section's original eligibility period, calculated the same way that section prescribed.
Who can claim this deduction?
An assessee that is a "Developer" of a Special Economic Zone notified on or after 1 April 2005 under the Special Economic Zones Act, 2005, and that was eligible for the deduction under section 80-IAB of the Income-tax Act, 1961.
Want this applied to your actual filing, not just explained?
Talk to our tax team about SEZ Developer tax benefitsLast updated 9 September 2026