Section 138 — Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. Successor to s.80 of the 1961 Act.
The section preserves a deduction arising under the repealed law. It applies for a tax year where clause (a) the gross total income of an assessee 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 clause (b) the assessee is eligible to claim a deduction from those profits and gains for that tax year under that section, as if that Act had not been repealed. A deduction from those profits and gains is then allowed in computing total income, subject to two conditions: under clause (i) the amount is calculated as per section 80-ia of the 1961 Act, and under clause (ii) the deduction is allowed only for such tax years as would have been allowed under that section, as if that Act had not been repealed.
Why it is there
Infrastructure deductions under the earlier law ran for a fixed number of years, and undertakings part-way through that run would have lost the balance on repeal. The section carries the entitlement across without restating it, so nothing is enlarged and nothing is cut short.
Who it applies to
An undertaking or enterprise deriving profits and gains from a business referred to in section 80-ia of the Income-tax Act, 1961
An assessee whose gross total income includes those profits and who was eligible to claim under that section
What this means in practice
Everything of substance sits outside the 2025 Act: eligibility, computation and the number of years all come from section 80-ia of the 1961 Act read as if it had not been repealed, so a claim must be worked and defended on that section's own conditions. The section opens no new deduction, because clause (b) requires the assessee already to be eligible there. And clause (ii) does not restart the count — only the years section 80-ia would still have allowed remain.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
A company operating an infrastructure facility was part-way through its section 80-ia deduction period when the Income-tax Act, 1961 was repealed. Section 138 lets it continue for the balance of the years that section would have allowed, computed under that section. It resets nothing, and gives nothing at all to an undertaking that had never become eligible under section 80-ia.
Where you meet this section
In the deduction claimed in the return of an infrastructure undertaking and in the verification of that claim — the supporting working is drawn from the repealed section 80-ia, not from any computation in the 2025 Act.
The words themselves
the deduction under this Act shall be allowed only for such tax years, as would have been allowed under section 80-IA of the Income-tax Act, 1961 (43 of 1961), as if the said Act had not been repealed
Section 138(ii), Income-tax Act, 2025.
What people get wrong
Looking for the conditions in the 2025 Act. Both the computation and the eligible years come from section 80-ia of the 1961 Act.
Treating the section as a fresh deduction for new undertakings. Clause (b) requires existing eligibility under section 80-ia.
Restarting the deduction period from the year the 2025 Act came into force. Clause (ii) limits it to the years section 80-ia would have allowed.
Claiming it where the profits are not part of the gross total income, which clause (a) requires.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
80-IA - Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.
Rules of the Income-tax Rules, 2026 that work section 138. Where the rule’s own heading names the section we say so; the rest are marked on reading the rule, which is our derivation and not the department’s. A rule that serves the section silently and that we have missed will not appear here.
Rule 66 — Furnishing of audit report for claiming deduction under section 46 or 138 or 139 or 140 or 141 or 142 or 143 or 144 — on reading the rule
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 13/2023 — Condonation of delay under clause (b) of sub-section (2) of section 119 of the Income-tax Act, 1961 for returns of income claiming 2023-07-26
Circular 1/2015 — Explanatory notes to the provisions of the finance no.2 act 2014 2015-01-21
Circular No. 10/2014 [F.No.178/84/2012-ITA-I] — Section 80-IA, sub-clause (iii) of sub-section (4) of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial un 2014-05-06
Circular No. 10/2005 — Definition of "Port" as Infrastructural Facility for the Purpose of Sections 10(23G) and 80-IA of the Income-tax Act, 1961 2005-12-16
Circular No. 7/2002 — Section 80-IA l Profits and Gains from Industrial Undertakings, ETC., Engaged in Infrastructure Development, ETC 2002-08-26
Circular No. 788 — Section 80-IB l Profits and Gains from Certain Industrial Undertakings Other Than Infrastructure Development Undertakings 2000-04-11
Circular No. 733 — 565-567. Whether Build-Own-Lease-Transfer (BOLT) Scheme of Indian Railways shall be eligible for benefit under section 80-IA, sinc 1996-01-03
Circular No. 731 — 604. Eligibility for deduction under section 80-O in case of receipt of brokerage by reinsurance agent, operating in India on beha 1995-12-20
Circular No. 705 — 613. Procedure regarding grant of approval under section 80 RRA 1995-06-20
Circular No. 700 — 603. Whether benefit of section 80-O would be available if technical and professional services, though rendered outside India, are 1995-03-23
Circular No. 683 — Section 80 l Loss - Submission of Return for 1994-06-08
Circular No. 575 — 545. Whether ‘convertible foreign exchange’ does not include remittances from Nepal and Bhutan 1990-08-31
Circular No. 533 — 602. Application for approval of agreement to be made in prescribed form and verified in prescribed manner 1989-03-27
Circular No. 246 — Section 8OU l Totally Blind or Physically Handicapped Persons 1978-09-20
Circular No. 187 — Section 80-O l RO Yalties, ETC., from Certain Foreign Enterprises 1975-12-23
Circular No. 57 — Section 80-I l Profits and Gains from Industries After Certain Date 1971-03-23
A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.
Notification No. 01/2013 — Section 80-IA, Sub-clause (iii) of sub-section (4) of the Income-tax Act, 1961 - Deductions - In respect of profits and gains from 2013-01-08
Notification No. 48/2012 — Section 80-IA, Sub-clause (iii) of Sub-section (4) of the Income-tax Act, 1961 - Deductions - in Respect of Profits and Gains from 2012-11-06
Notification No. 47/2012 — Section 80-IA, Sub-clause (iii) of Sub-section (4) of the Income-tax Act, 1961 - Deductions - in Respect of Profits and Gains from 2012-11-06
Notification No. 17/2012 — Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial infrastructure undertakings, etc. - Not 2012-05-11
Notification No. 13/2012 — Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and Gains from Industrial Infrastructure Undertakings, ETC. - Not 2012-03-22
Notification No. 10/2012 — Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial infrastructure undertakings, etc. - Not 2012-02-21
Notification No. 11/2011 — Income-tax : Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial infrastructure undertaking 2011-02-24
Notification No. 47 — Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial infrastructure undertakings, etc. - Not 2010-07-09
Notification No. 80 — Section 80-IA of the Income-tax Act, 1961 – Deductions – Profits and gains from industrial undertakings, etc, - Notified undertaki 2009-10-27
Notification No. 106 — Industrial Park Scheme, 2008 - Amendments in Form Ips-1 2008-11-28
Notification No. 98 — Income-tax (Eighth Amendment) Rules, 2008 - Insertion of rule 18DDA and Form No. 10CCBD 2008-10-22
Notification No. 89 — Section 80-IC (2)(A) of the Income-tax Act 1961 – Deduction – Special Provision in Respect of Certain Undertakings or Enterprises 2008-08-27
Notification No. 76 — A notification under section 10A of the Income-tax Act, 1961 2008-07-02
Notification No. 66 — Following undertakings notified under section 80 2008-05-30
Notification No. 03 — A notification under section 80 of the Income-tax Act, 1961 2008-01-08
Notification No. 02 — Amendment of the Income-tax Rules under section 80 of the Income-tax Act, 1961 2008-01-08
Notification No. 281 — Amendment of the Income-tax Rules under section 80 of the Income-tax Act, 1961 2007-11-27
Notification No. 211 — Section 80-IA(4)(iii) of the Income-tax Act, 1961 - Deductions - In respect of profits and gains from industrial undertakings, etc 2007-07-31
Notification No. 67 — Amendment of the Income-tax Rules under section 32 of the Income-tax Act, 1961 2005-02-28
Notification No. 58 — Amendment of the Income-tax Rules under section 40A of the Income-tax Act, 1961 2005-02-17
Notification No. 43 — Amendment of the Income-tax Rules under section 80 of the Income-tax Act, 1961 2005-02-04
Notification No. 142 — Amendment of the Income-tax Rules under section 80 of the Income-tax Act, 1961 2004-04-19
Notification No. 49 — A notification under section 3 of the Income-tax Act, 1961 2004-02-13
Notification No. 41 — Industrial areas in the State of Sikkim in column (2) of the Schedule below notified under section 80 2004-02-06
Notification No. 292 — Amendment of the Income-tax Rules under section 23 of the Income-tax Act, 1961 2003-11-13
Notification No. 156 — Amendment of the Income-tax Rules under section 80 of the Income-tax Act, 1961 2003-06-18
Notification: 124 Date of Issue : 31/5/2002 — 4. The percentage of land to be earmarked for commercial use shall not be more than 10 per cent of the allocable area. 2002-05-31
Notification No. 85E- — A notification under section 80 of the Income-tax Act, 1961 2001-01-31
Notification No. 24- — A notification under section 80 of the Income-tax Act, 1961 2001-01-31
Notification No. 1692 — Multilevel Computerised Car Parking as infrastructure facility notified under section 10 2000-07-13
Notification No. 285(E) — An undertaking developed and being maintained and operated by Western India Kinfra Ltd notified under section 80 2000-03-28
Notification No. 11291 — An undertaking developed and being maintained and operated by M/s International Tech Park Limited notified under section 80 2000-03-28
Notification No. 11185 — An undertaking developed and being maintained and operated by the Wise Industrial Park Limited notified under section 80 1999-12-28
Notification No. 11174 — A notification under section 80 of the Income-tax Act, 1961 1999-12-20
Notification No. 11103 — A notification under section 80 of the Income-tax Act, 1961 1999-10-06
Notification No. 11102 — A notification under section 80 of the Income-tax Act, 1961 1999-10-06
Notification No. 11022 — Following industries in the North-Eastern Region to be the industries notified under section 80 1999-08-04
S.O. 627(E) — Following industries in the North-Eastern Region to be the industries notified under section 80 1999-08-04
Notification No. 10963 — A notification under section 80 of the Income-tax Act, 1961 1999-06-16
S.O. 447(E) — A notification under section 80 of the Income-tax Act, 1961 1999-06-16
Notification No. 10958 — A notification under section 80 of the Income-tax Act, 1961 1999-06-15
Notification No. 10957 — A notification under section 80 of the Income-tax Act, 1961 1999-06-15
S.O. 440(E) — A notification under section 80 of the Income-tax Act, 1961 1999-06-15
S.O. 439(E) — A notification under section 80 of the Income-tax Act, 1961 1999-06-15
Notification No. 10956 — A notification under section 80 of the Income-tax Act, 1961 1999-06-14
Notification No. 10955 — A notification under section 80 of the Income-tax Act, 1961 1999-06-14
S.O. 435(E) — A notification under section 80 of the Income-tax Act, 1961 1999-06-14
S.O. 434(E) — A notification under section 80 of the Income-tax Act, 1961 1999-06-14
S.O. 401(E) — A notification under section 80 of the Income-tax Act, 1961 1999-05-31
Notification No. 10942 — A notification under section 7 of the Income-tax Act, 1961 1999-05-28
S.O. 391(E) — A notification under section 80 of the Income-tax Act, 1961 1999-05-28
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 138. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
Liberty India v CITSupreme CourtHelps departmenttagged s.80-IB Can I count depb credits and duty drawback in the profits for my 80-ib deduction?
PCIT v Wipro LtdSupreme CourtHelps departmenttagged s.80 A declaration was required by the due date and you filed it late. Is that fatal?
Balaji Landmarks LLP v CBDTHigh CourtHelps taxpayertagged s.80 I filed my loss return late on my ca's advice and lost the carry-forward. Will the delay be condoned?
Coromondel Cabeles (P) Ltd v ACITHigh CourtCuts both waystagged s.80-IB(10) I never claimed section 80-ib(10) in my return under section 139(1). Can the High Court still let me have the deduction in a section 260A appeal?
Gateway Terminals India v DCITHigh CourtHelps taxpayertagged s.80-IA Does interest on fixed deposits I was obliged to make for the eligible business, and interest on the refund of TDS my customers wrongly deducted…
Ranbaxy Laboratories Ltd v CITHigh CourtHelps taxpayertagged s.80-I Same point, in Delhi: if the recorded grounds fail, can the officer still tax an unrelated item?
ACIT v Monarch Innovative TechnologiesITATHelps taxpayertagged s.80-IC My return went in by the due date but I claimed the deduction for the first time in a revised return. Does section 80AC block the claim?
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.