Section 144 — Special provisions in respect of newly established Units in Special Economic Zones. Successor to s.10AA of the 1961 Act.
Section 144 is in Chapter VIII — Deductions to Be Made in Computing Total Income, which runs from section 122 to section 154.
The section preserves the Special Economic Zone deduction that ran under section 10AA of the Income-tax Act, 1961 after that Act's repeal. It applies for a tax year where, 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 services as referred to in section 10AA, that assessee is eligible to claim a deduction from profits and gains derived from the export of such articles or things, or from services, for that year under that section, had the 1961 Act not been repealed.
Where it applies, a deduction from the profits and gains derived from such business is allowed, on two conditions: clause (i), that the amount is calculated as per section 10AA of the 1961 Act; and clause (ii), that it is allowed only for such tax years as would have been allowed under section 10AA as if that Act had not been repealed.
Special Economic Zone units had committed on the strength of a multi-year deduction under the repealed Act, and repeal alone would have cut the entitlement short. The section carries the old measure forward without restating it: both quantum and remaining years are borrowed from section 10AA. It is a run-off provision, not a fresh incentive.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Amount of the deduction | As calculated under section 10AA of the Income-tax Act, 1961 — this section states no percentage or formula of its own | Computed on profits and gains derived from the export of such articles or things, or from services | Clause (i) |
| Number of tax years for which the deduction is available | Only those tax years that would have been allowed under section 10AA of the Income-tax Act, 1961 — this section states no period of its own | Determined as if the 1961 Act had not been repealed | Clause (ii) |
Both the quantum and the number of remaining years are read out of section 10AA of the repealed 1961 Act as it would have applied, so the working papers for this claim are the old ones and nothing in the section restarts the period. The other point to carry forward is on the section 202 side: with sub-clause (2)(a)(iii) omitted by Act No. 4 of 2026 with effect from 1 April 2026, section 144 is no longer among the deductions denied under the default regime.
An entrepreneur under section 2(j) of the Special Economic Zones Act, 2005 was part-way through the run of years section 10AA allowed when the 1961 Act was repealed. Section 144 lets the deduction continue: the amount is worked out on the section 10AA basis from export profits, and it runs only for the balance of the years that section would have allowed. The clock does not restart, and a Unit that had exhausted its section 10AA years gets nothing.
In the deduction claimed in the return of a Special Economic Zone Unit, and in scrutiny of that claim, where the Assessing Officer tests both quantum and remaining years against section 10AA of the 1961 Act as it would have stood.
the amount of deduction is calculated as per the provisions of section 10AA of the Income-tax Act, 1961 (43 of 1961)
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 (43 of 1961), as if the said Act had not been repealed
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the circulars index.
