Section 138
Section 138: deduction for profits of industrial undertakings/enterprises in infrastructure development, etc.
Section 138 is a bridging provision: it does not restate the detailed conditions of the old profit-linked infrastructure deduction, but instead cross-refers to Section 80-IA of the repealed Income-tax Act, 1961. Where an assessee's undertaking or enterprise was eligible for a deduction under that old Section 80-IA, Section 138 lets the same deduction continue to be claimed under the Income-tax Act, 2025, computed exactly as the 1961 Act's Section 80-IA prescribed.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
What Section 138 provides
Where, for a tax year, an assessee's gross total income includes profits and gains derived by an undertaking or enterprise from a business referred to in Section 80-IA of the Income-tax Act, 1961, and the assessee is eligible to claim a deduction from those profits under that section (as if the 1961 Act had not been repealed), a deduction is allowed in computing total income, subject to two conditions.
- The amount of the deduction is calculated as per the provisions of Section 80-IA of the Income-tax Act, 1961.
- The deduction is allowed only for such tax years as would have been allowed under Section 80-IA of the Income-tax Act, 1961, had that Act not been repealed.
What this means in practice
Section 138 does not create new eligibility conditions of its own - it is a continuity provision. The scope of eligible businesses, the quantum of deduction, and the number of years for which it can be claimed are all governed by the mechanism of the old, repealed Section 80-IA of the Income-tax Act, 1961, not by fresh conditions in the 2025 Act itself.
Frequently asked questions
Does Section 138 set out its own list of eligible infrastructure businesses?
No - it cross-refers to Section 80-IA of the repealed Income-tax Act, 1961 for both eligibility and the computation mechanism, rather than restating the conditions afresh.
For how many years can the Section 138 deduction be claimed?
Only for the tax years that would have been available under Section 80-IA of the Income-tax Act, 1961, had that Act not been repealed - the years are not reset or extended by the 2025 Act.
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Check your infrastructure undertaking's Section 138 deduction with our tax teamLast updated 9 September 2026