TaxTMI 
TaxTMI 
Special provisions in respect of Newly established units in Special Economic Zone (SEZ) - Section 144 (New) / Section 10AA (Old)
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....e deduction under section 10AA of the Income Tax Act, 1961, had that Act not been repealed. The provision operates subject to the following conditions: (a) Eligibility of the assessee • The assessee must be an entrepreneur as referred to in section 2(j) of the Special Economic Zones Act, 2005. • The assessee must have commenced the manufacture or production of articles or things, or the provision of services, as referred to in section 10AA of the Income-tax Act, 1961. • The assessee must be eligible to claim the deduction under section 10AA of the Income-tax Act, 1961 for the relevant tax year, assuming that the said Act had not been repealed. (b) Computation of deduction • ....
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....before the due date. [Amended by FA, 2023] Essential conditions to claim deduction:- • The unit in SEZ begins to manufacture or produce articles or things or provide services during the financial year 2006-07 or any subsequent year. • It is not formed by splitting up, or reconstruction, of a business already in existence. However deduction is allowed in case unit is formed by result of re-establishment, reconstruction or revival of the business. • It is not formed by a transfer to a new business of machinery and plant previously used for any purpose. However deduction shall be allowed if the total value of the second hand machinery does not exceed 20% of the total value of machin....
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....les or things or services received in, or brought into, India by the assessee in convertible foreign exchange, but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things outside India or expenses, if any, incurred in foreign exchange in rendering of services (including computer software) outside India. Limit of Deduction In computing the total income of an undertaking, which begins to manufacture or produce articles or things or computer software in any SEZ, the deduction shall be: • i. For first 5 Assessment Years - 100% of export profits • ii. For next 5 Assessment Years - 50% of such profits or gains • iii. For next 5 Assessment ....
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.... (i) not be formed by splitting up or reconstruction of unit already in existence (ii) Should not be formed by transferring machinery or plant previously used. • Export turnover means the consideration in respect of export received in, or brought into India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year period as may be permitted by the RBI, but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India. • If d....
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....led products in the new unit. Comparative Analysis of Section 10AA of Income Tax Act, 1961 and Section 144 of Income Tax Act, 2025 Particulars Section 10AA (Income-tax Act, 1961) Section 144 (Income-tax Act, 2025) Scope Provides for deduction in respect of profits and gains derived from the export of articles, things or services by eligible units established in Special Economic Zones. Provides for continuation of the deduction for eligible assessees who would have been entitled to claim it under section 10AA, had the Income-tax Act, 1961 not been repealed. Eligibility of Assessee Applies to an entrepreneur referred to in section 2(j) of the Special Economic Zones Act, 2005, whose unit satis....