Section 145 - Deduction for businesses engaged in collecting and processing of bio-degradable waste
A business collecting and processing biodegradable waste for listed outputs can deduct 100% of eligible profits for five consecutive tax years from commencement.
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
A business collecting and processing biodegradable waste for listed outputs can deduct 100% of eligible profits for five consecutive tax years from commencement.
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 145.
Old-law bridge
1961 Act section 80JJA
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 Ring-fence eligible activity, common expenses and by-product income. The five-year clock starts with business commencement.
Connected Income-tax Rules, 2026 and Forms
No provision-specific Rule/Form is independently mapped in this tranche. General return, procedure and evidence rules can still apply.
Worked application
A new eligible unit begins producing biogas from biodegradable waste in 2026-27. Its five-year period begins that year if the statutory business conditions are satisfied.
Evidence / compliance checklist
- Maintain the original eligibility file for section 145, 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 145: Deduction for businesses engaged in collecting and processing of bio-degradable waste).
- Where Rule 66 applies, obtain Form 32 and reconcile the accountant-certified figures to the return before the due date (section 145: Deduction for businesses engaged in collecting and processing of bio-degradable waste).
- Preserve evidence that reconstruction, transfer, location, approval and other formation conditions continue to be satisfied (section 145: Deduction for businesses engaged in collecting and processing of bio-degradable waste).
Common mistake
Treating section 145 as a fresh 2026 tax holiday. For section 145, 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 145, fix the governing tax year, identify the operative sub-section for “Deduction for businesses engaged in collecting and processing of bio-degradable waste”, 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
- gains for five consecutive tax years, beginning with the tax year in which such
Judicial / interpretive bridge
No section-specific Supreme Court bridge is included for section 145 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 145 merely because the subject is similar.
Related provisions
Current statutory text
Primary-source trail
FAQs
What does section 145 of the Income-tax Act, 2025 cover?
Section 145 covers deduction for businesses engaged in collecting and processing of bio-degradable waste. 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 145?
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 145.
Are there specific Rules or Forms for section 145?
No provision-specific Rule/Form independently mapped in this tranche.