Sub-section (1) allows an eligible start-up whose gross total income includes profits from an eligible business a deduction of 100% of those profits for three consecutive tax years, and sub-section (2) lets the assessee pick which three, out of ten years from the year of incorporation. Sub-section (3) requires the start-up not to be formed by splitting up or reconstruction of an existing business and not by transfer of previously used machinery or plant, with sub-section (4) relaxing the first condition where a business destroyed by natural calamity, riot, fire, explosion or enemy action is revived within three years, sub-section (5) treating imported machinery never used in India and never depreciated here as not previously used, and sub-section (6) treating the second condition as met where transferred used plant is not more than 20% of the total value of plant in the business. Sub-section (7) computes the eligible business as the only source of income for quantifying the deduction in years after the initial year; sub-section (8) makes the deduction inadmissible unless the accounts are audited by an accountant before the specified date in section 63 and the report is filed by that date. Sub-sections (9) to (14) recompute inter-business transfers at market value or arm's length price, let the Assessing Officer adopt a reasonable basis in cases of exceptional difficulty, bar overlapping Part C claims and cap the deduction at the eligible business profits, and cut back more-than-ordinary profits arising from a close connection. Sub-section (15) lets the Central Government withdraw the benefit for a class of undertaking by notification, and sub-section (16) defines eligible business and eligible start-up — incorporated on or after 1 April 2016 but before 1 April 2030, turnover not exceeding three hundred crore rupees (raised from one hundred crore by Act No. 4 of 2026 with effect from 1 April 2026), and holding an Inter-Ministerial Board certificate.
Why it is there
It gives a qualifying start-up a full holiday on its business profits for three years of its choice in its first decade, while the formation conditions, the audit requirement and the transfer-pricing style adjustments keep the relief away from repackaged existing businesses and from profits shifted in from connected parties.
Who it applies to
An eligible start-up, being a company or a limited liability partnership engaged in eligible business
An assessee reviving a business destroyed by flood, cyclone, earthquake, riot, fire, explosion or enemy action
The Assessing Officer (market value recomputation and more-than-ordinary profits)
The Central Government (notification withdrawing the benefit for a class of undertaking)
The figures, and what each one turns on
Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.
What
Figure
The condition on it
Where
Rate of deduction
100% of the profits and gains derived from the eligible business
For three consecutive tax years
Sub-section (1)
Window from which the three years may be chosen
Ten years
Beginning from the year in which the eligible start-up is incorporated; the choice is the assessee's
Sub-section (2)
Time to revive a business destroyed by calamity and still be treated as not formed by reconstruction
Three years
From the end of the tax year in which the business was discontinued by reason of the damage or destruction
Sub-section (4)
Tolerance for previously used machinery or plant transferred to the new business
20% of the total value of machinery or plant used in the business
At or below this the condition in sub-section (3)(b) is deemed complied with
Sub-section (6)
Incorporation window for an eligible start-up
On or after 1st April 2016 but before 1st April 2030
A condition of being an eligible start-up
Sub-section (16)(b)(i)
Turnover ceiling for an eligible start-up
Three hundred crore rupees
Total turnover of the business in the tax year relevant to the year of claim; substituted for 'one hundred crore rupees' by Act No. 4 of 2026 with effect from 1 April 2026
Sub-section (16)(b)(ii)
Audit and report deadline
The specified date referred to in section 63
Accounts of the eligible business must be audited by an accountant before that date and the report furnished by that date, failing which the deduction is inadmissible
Sub-section (8)
What this means in practice
Choose the three years deliberately — sub-section (2) lets you pick any three consecutive years within ten of incorporation, and sub-section (7) then computes the eligible business as if it were your only source of income for the years after the initial year. The audit is a condition of the deduction, not a formality: no audit and no report by the section 63 specified date means no deduction at all under sub-section (8). Watch the certificate and the turnover test in sub-section (16)(b): the Inter-Ministerial Board certificate is mandatory, and the turnover ceiling is three hundred crore rupees from 1 April 2026 following Act No. 4 of 2026, against one hundred crore before that. Transactions with the assessee's other businesses or with closely connected persons will be repriced under sub-sections (9) to (14) if they inflate the sheltered profits.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
An eligible start-up incorporated in 2022, holding an Inter-Ministerial Board certificate, has turnover of Rs. 250 crore and Rs. 30 crore of profits from its eligible business. The turnover is within the ceiling as it now stands — three hundred crore rupees, substituted for one hundred crore by Act No. 4 of 2026 with effect from 1 April 2026 — so it may claim 100% of the Rs. 30 crore, for any three consecutive years it chooses out of ten from the year of incorporation. Two things can still take the claim away: second-hand plant of Rs. 5 crore transferred into a business whose total plant is Rs. 20 crore is 25%, breaching the 20% tolerance in sub-section (6) and so the condition in sub-section (3)(b); and if the accounts are not audited before the specified date in section 63 with the report furnished by that date, sub-section (8) makes the deduction inadmissible however good the claim otherwise is.
Where you meet this section
In the return of a start-up claiming the deduction, supported by the audit report in the prescribed form required by sub-section (8) and filed by the section 63 specified date, and by the certificate of eligible business from the Inter-Ministerial Board of Certification. Then in the assessment, where the Assessing Officer may recompute transfers between the assessee's businesses at market value or arm's length price and cut back more-than-ordinary profits arising from a close connection.
The words themselves
there shall, as per and subject to the provisions of this section, 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 three consecutive tax years
s.140(1), Income-tax Act, 2025.
What people get wrong
Reading the heading and expecting a 'specified business' provision. The section is about an 'eligible business' of an 'eligible start-up' as defined in sub-section (16); 'specified business' does not appear in the operative text at all.
Using the old turnover limit. Act No. 4 of 2026 substituted 'three' for 'one' hundred crore rupees in sub-section (16)(b)(ii) with effect from 1 April 2026.
Assuming any newly incorporated company qualifies. Sub-section (16)(b) requires incorporation before 1 April 2030 and a certificate of eligible business from the Inter-Ministerial Board of Certification.
Filing the audit report late. Sub-section (8) requires both the audit before, and the report by, the specified date under section 63.
Treating the three years as fixed from incorporation. Sub-section (2) makes them the assessee's choice within the ten-year window, but they must be consecutive.
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-IAC - Special provision in respect of specified business
Rules of the Income-tax Rules, 2026 that work section 140. 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 140. 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.