Section 139 - Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone
This preserves remaining old section 80-IAB eligibility for a qualifying SEZ developer. The old-law amount and residual period govern.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current-law control
This page uses the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026. Earlier years and saved proceedings remain subject to the repeal-and-savings framework.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
This preserves remaining old section 80-IAB eligibility for a qualifying SEZ developer. The old-law amount and residual period govern.
Who should use this section
Eligible undertakings, enterprises or units claiming a profit-linked or transition deduction, generally subject to historical eligibility and audit conditions This applicability note is specific to section 139.
Old-law bridge
1961 Act section 80-IAB
The bridge is navigational only. A 1961 Act case or rule is carried forward only after checking wording, transition provisions and the current 2025 Act text.
Professional alert
Exception / professional alert Verify developer status, notification, old claim history and residual period. Rule 66/Form 32 applies.
Connected Income-tax Rules, 2026 and Forms
| Rule | Current control | Form |
|---|---|---|
| Rule 66 | Audit report for profit-linked deductions | Form 32 |
Worked application
An SEZ developer still eligible under old section 80-IAB claims the remaining deduction under section 139 after satisfying the preserved conditions and audit report requirement.
Evidence / compliance checklist
- Maintain the original eligibility file for section 139, including commencement/approval history and the remaining deduction period.
- Keep unit-wise books and a computation linking eligible profits to the qualifying undertaking or activity (section 139: Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone).
- Where Rule 66 applies, obtain Form 32 and reconcile the accountant-certified figures to the return before the due date (section 139: Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone).
- Preserve evidence that reconstruction, transfer, location, approval and other formation conditions continue to be satisfied (section 139: Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone).
Common mistake
Treating section 139 as a fresh 2026 tax holiday. For section 139, the preserved or transitional old-law eligibility must be checked specifically; the deduction clock does not restart merely because the 2025 Act is now in force.
Recommended approach
For section 139, fix the governing tax year, identify the operative sub-section for “Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone”, trace every amount to evidence, apply only verified Rule/Form links, and retain a computation that another reviewer can reproduce from the primary source.
Thresholds, periods and timing checkpoints
- 139. In respect of any tax year, where—
- 1st April, 2005 under the Special Economic Zones Act, 2005 (28 of 2005)
- derived from such business for such tax year under the provisions of the
- (ii) the deduction under this Act shall be allowed only for such tax years, as
Judicial / interpretive bridge
No section-specific Supreme Court bridge is included for section 139 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 139 merely because the subject is similar.
Related provisions
Current statutory text
Primary-source trail
FAQs
What does section 139 of the Income-tax Act, 2025 cover?
Section 139 covers deductions in respect of profits and gains by an undertaking or enterprise engaged in development of special economic zone. The operative result depends on the exact statutory conditions shown on this page and applies from 1 April 2026, subject to transition/savings provisions.
Who should check section 139?
Eligible undertakings, enterprises or units claiming a profit-linked or transition deduction, generally subject to historical eligibility and audit conditions This applicability note is specific to section 139.
Are there specific Rules or Forms for section 139?
Rule 66 - Audit report for profit-linked deductions / Form 32