Section 144 — SEZ Unit 10AA | ITA 2025

Section 144 — SEZ UNIT PROFITS DEDUCTION (1961 s. 10AA → s. 80-IE TYPE PROFITS)

Section 144 is the substantive equivalent of 1961 s. 10AA — for SEZ-units (operating businesses inside SEZ). Deduction structure (for legacy units commenced before 31-Mar-2020 cut-off): (a) First 5 years (Years 1-5): 100% of export-profits deductible; (b) Years 6-10: 50% of export-profits; (c) Years 11-15: 50% subject to creation of SEZ Reinvestment Reserve of 50% of profits. Sunset: new SEZ-unit commencements post 1-Apr-2020 forfeit the deduction (s. 10AA closed).

Statutory text — Income-tax Act, 2025

Marginal note — Deductions in respect of profits and gains from businesses of newly established units in Special Economic Zones

In respect of any tax year, where—

(a) 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 (28 of 2005), who begins to manufacture or produce articles or things or provide any services, as referred to in section 10AA 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 the export, of such articles or things or from services for such tax year under the provisions of the said section, if the said Act had not been repealed, there shall be allowed, in computing the total income of the assessee, a deduction from the profits and gains derived from such business, subject to the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 10AA 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as would have been allowed under section 10AA of the Income-tax Act, 1961 (43 of 1961), as if the said Act had not been repealed. Deduction for businesses engaged in collecting and processing of bio-de- gradable waste.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 144	INCOME-TAX ACT, 1961 — s. 10AA
SEZ-unit 15-year tapering deduction	1961 s. 10AA — same scheme
Y 1-5: 100%; Y 6-10: 50%; Y 11-15: 50% with reserve	1961 s. 10AA(1)
Sunset 1-Apr-2020 for new commencements	1961 s. 10AA proviso

PLANNING NOTES

(i) For legacy SEZ-units (BoA / DC approval pre-1-Apr-2020), maintain segregated SEZ-unit accounts. (ii) MAT 15% applies despite s. 144 deduction. (iii) For Years 11-15, mandatory creation of SEZ Reinvestment Reserve (50% of profits) — utilise within 3 years for purchase of new plant / machinery in SEZ. (iv) For SEZ-developers (s. 139), separate / different regime. (v) IFSC / GIFT-City units may have additional / overlapping benefits — coordinate with s. 146.

CROSS-REFERENCES

Section 139 — SEZ developer.
Section 146 — IFSC unit deduction.
SEZ Act, 2005.

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