Section 143 of the Income-tax Act, 2025 — Special Provisions (100% Deduction) for Undertakings in North-Eastern States

In plain language

What Section 143 is about

Section 143 of the Income-tax Act, 2025 is a profit-linked deduction that rewards businesses set up (or substantially expanded) in the eight North-Eastern States of India. If your undertaking qualifies, you can claim a deduction equal to 100% of the profits and gains from the eligible business for ten consecutive tax years, starting with the "initial tax year". In simple words: for a full decade, the profit from that unit is effectively tax-free.

This provision carries forward the substance of the old Section 80-IE of the Income-tax Act, 1961. When Parliament rewrote the entire tax law into the 2025 Act (in force from 1 April 2026), the North-Eastern incentive was renumbered and moved into the deductions chapter as Section 143, but the core benefit remains the same.

Which States are covered

• Arunachal Pradesh
• Assam
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Sikkim
• Tripura

Only undertakings located in these eight States get the benefit.

Who can claim it (eligible activities)

The undertaking must, during the window 1 April 2007 to 1 April 2017, have begun to manufacture/produce an eligible article or thing, or undertaken substantial expansion, or begun one of the notified eligible services. Eligible businesses include:

• Manufacture or production of any eligible article or thing (see negative list below).
• Hotels of two-star category or above.
• Nursing homes with a minimum bed capacity (health/medical services).
• Old-age homes.
• Vocational training institutes — hotel management, catering, entrepreneurship, nursing, para-medical, aviation, fashion design and industrial training.
• IT-related training centres and IT hardware manufacturing units.
• Bio-technology undertakings and eco-tourism/adventure & leisure sport (including ropeways).

Key conditions and limits

• Deduction: 100% of eligible profits — not 25% or 30%, the whole profit.
• Period: 10 consecutive tax years from the initial tax year (the year manufacture starts or substantial expansion is completed).
• Substantial expansion means at least a 25% increase in the investment in plant and machinery (book value before depreciation).
• No splitting/reconstruction: the unit must not be formed by splitting up or reconstructing an existing business, or by transferring old/used plant and machinery (limited revival exceptions apply, linked to Section 140(4)).
• Overall 10-year cap: under Section 143(6), the combined period of deduction — counting any deduction already claimed under this section and under the second proviso to Section 80-IB(4) of the 1961 Act — cannot exceed ten tax years. You cannot double-dip to stretch beyond a decade.

Negative list — what does NOT qualify

Certain "sin" and low-value goods are specifically excluded from being an "eligible article or thing":

• Tobacco and tobacco products (Chapter 24 of the Central Excise Tariff).
• Pan masala (Chapter 21).
• Plastic carry bags of less than 20 microns.
• Goods produced by petroleum-oil or gas refineries (Chapter 27).

How it interacts with other sections

• No double deduction: the same profits cannot be claimed again under any other deduction in the same chapter.
• The deduction is on profits and gains that are part of gross total income, so it reduces taxable income directly.
• It follows the general machinery rules for audit, separate books and inter-unit transfer pricing that apply to profit-linked deductions — you must maintain the accounts of the eligible unit and get them audited, filing the audit report with the return.

Practical implications

Because the qualifying window closed on 1 April 2017, no brand-new claim can start today — the section now mainly protects units whose 10-year block is still running from a start or expansion in the 2007-2017 period. If your unit began or expanded, say, in FY 2016-17, its ten-year block can run up to around FY 2025-26/2026-27. So in practice Section 143 is largely a "tail" benefit for older North-Eastern units, and getting the initial-year and 10-year-cap arithmetic right is the most important compliance point.