Tax Deductions for Special Category States: Key Benefits Under Section 80-IC for Manufacturing and Expansion Until 2012.

Section 80-IC provides tax deductions for undertakings in special category states like Sikkim, Himachal Pradesh, Uttaranchal, and certain North Eastern states, which manufacture or produce articles or undergo substantial expansion by March 31, 2012. "Substantial expansion" involves a 50% increase in plant and machinery investment. Eligible undertakings receive a 100% deduction on profits for the first five years and 25% (30% for companies) for the next five. The section excludes businesses formed by splitting or reconstruction but includes those formed by transferring used machinery. Audited accounts and claiming deductions in the return are mandatory.