Section 32AD — Investment in new plant or machinery in notified backward areas in certain State

Chapter IV-D — Profits and Gains of Business or ProfessionITA 1961Up to AY 2025-26

Function in the statutory architecture

Statutory text — Income-tax Act, 1961

CHAPTER IV

COMPUTATION OF TOTAL INCOME / D. PGBP

Investment in new plant or machinery in notified backward areas in certain States.

32AD. (1) Where an assessee, sets up an undertaking or enterprise for manufacture or production of any article or thing, on or after the 1st day of April, 2015 in any backward area notified by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal, and acquires and installs any new asset for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020 in the said backward area, then, there shall be allowed a deduction of a sum equal to fifteen per cent of the actual cost of such new asset for the assessment year relevant to the previous year in which such new asset is installed.

(2) If any new asset acquired and installed by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger or re-organisation of business referred to in clause (xiii)or clause (xiiib)or clause (xiv)of section 47, within a period of five years from the date of its installation, the amount of deduction allowed under sub-section (1)in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which such new asset is sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of such new asset.

(3) Where the new asset is sold or otherwise transferred in connection with the amalgamation or demerger or reorganisation of business referred to in clause (xiii)or clause (xiiib)or clause (xiv)of section 47 within a period of five years from the date of its installation, the provisions of sub-section (2) shall apply to the amalgamated company or the resulting company or the successor referred to in clause (xiii)or clause (xiiib)or clause (xiv)of section 47, as the case may be, as they would have applied to the amalgamating

company or the demerged company or the predecessor referred to in clause (xiii)or clause (xiiib)or clause

(xiv)of section 47.

(4) For the purposes of this section, "new asset" means any new plant or machinery (other than a ship or aircraft) but does not include—

(a) any plant or machinery, which before its installation by the assessee, was used either within or

outside India by any other person;

(b) any plant or machinery installed in any office premises or any residential accommodation,

including accommodation in the nature of a guest house;

(d) any vehicle; or (e) any plant or machinery, the whole of the actual cost of which is allowed as deduction (whether by

way of depreciation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession" of any previous year.

— Footnotes (gazette text) —

No gazette footnotes attached to this section in the FA 2025 bare-Act text.

— Source —

Verbatim text reproduced from income-tax-act-1961-as-amended-by-finance-act-2025.pdf (full layout extract, 0-indexed lines 8185-8230). Reproduced under Standard B (gazette-text discipline) — gazette content, French-style colon spacing, italics-for-Provisos/Explanations convention, and *N. footnote-numbering preserved.

PDF-extraction artifacts repaired: per-page header (“INCOME-TAX ACT, 1961 - 2024”), per-page footer, 2+ consecutive blank lines at page-break boundaries collapsed to a single blank, orphaned footnote-marker joining.

Finance Act 2026 overlay: not applicable. FA 2026 amends 14 sections of the 1961 Act (92CA, 139, 144C, 153B, 220, 222, 245, 245MA, 254, 275A, 275B, 276, 278A, 280) — this section is not among them.

Function in the statutory architecture

Investment in notified backward areas of AP / Bihar / Telangana / WB (FA 2015).

Historical context / FA amendment trail

Substantively stable / sunset by Finance Act; see source-block FA-amendment trail (where applicable).

Operative consequences

• Operates within the Chapter IV-D PGBP computational framework.

• Cross-references operative companion sections.

← All sections (939)Act 1961 hub

Income-tax Act, 1961	Income-tax Act, 2025 / Allied Sources
s. 32AD — Investment in notified backward areas of AP / Bihar / Telangana / WB (FA 2015).	Corresponding provision in the 2025 Act preserves the same framework where the section remains operative; superseded for omitted sections.