Section 138 — Infrastructure Profits 80-IA | ITA 2025

Section 138 — INFRASTRUCTURE PROFITS DEDUCTION (1961 s. 80-IA SUCCESSOR)

Section 138 is the substantive equivalent of 1961 s. 80-IA. Cross-reference / continuation provision — preserves deduction for legacy 80-IA infrastructure-development undertakings (power generation/distribution / road / port / airport / industrial park / SEZ developer pre-FA 2017 / telecom-services pre-FA 2005). 100% deduction for 10 consecutive AYs out of 15 / 20 years from commencement. Most categories sunset — verify per-undertaking eligibility per Income-tax Rules, 2026.

Statutory text — Income-tax Act, 2025

Marginal note — Deductions in respect of profits and gains by an undertaking or an enterprise engaged in infrastructure development, etc.

In respect of any tax year, where—

(a) the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in section 80-IA of the Income-tax Act, 1961 (43 of 1961); and

(b) such assessee is eligible to claim a deduction from the profits and gains derived from such business for such tax year under the provisions of the said section, as if the said Act had not been repealed, there shall be allowed, in computing the total income of the assessee, a deduction from the profits and gains derived from such business, subject to the conditions that—

(i) the amount of deduction is calculated as per the provisions of section 80-IA of the Income-tax Act, 1961 (43 of 1961); and

(ii) 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would have been allowed under section 80-IA of the Income-tax Act, 1961 (43 of 1961), as if the said Act had not been repealed.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 138	INCOME-TAX ACT, 1961 — s. 80-IA
Infrastructure profits 100% deduction (10 of 15 yrs)	Same
Power / road / port / airport / SEZ developer / telecom legacy	1961 s. 80-IA(4)
Sunset for new undertakings post-FA 2017	Phase-out provisions
Tax holiday election + transferee continuation	1961 s. 80-IA(7)/(12)

PLANNING NOTES

(i) For pre-sunset (legacy) 80-IA-claiming undertakings, ensure year-by-year deduction documentation is preserved through tax holiday period (10 / 20 years). (ii) MAT / s. 200 minimum-alternative-tax interactions — even with 100% s. 138 deduction, MAT 15% may apply. (iii) For undertakings transferring to new owners (slump-sale), s. 138 continuation conditions strict — verify before deal closure. (iv) Captive consumption rule for power generation — value at lower of ALP or rate-charged-to-third-parties.

CROSS-REFERENCES

Section 200 — MAT (interaction).
Sections 139-142 — Other infrastructure / housing deductions.

← All sections (537)Act 2025 hub