Section 143
Section 143: deduction for undertakings in the North-Eastern States
Section 143 gives a 100% profit deduction, for ten consecutive tax years, to undertakings that began (or begin) manufacturing, undertook substantial expansion, or carried on certain listed eligible businesses in one of the North-Eastern States during a defined window - 1 April 2007 to before 1 April 2017. It carries several conditions and exclusions similar in structure to Section 140's start-up conditions.
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.
The deduction
Where the gross total income of an assessee includes profits and gains derived by a qualifying undertaking from a business described below, a deduction equal to 100% of the profits and gains derived from that business is allowed for ten consecutive tax years, commencing with the initial tax year.
Who qualifies - the time window and activities
The section applies to any undertaking that, during the period beginning on 1 April 2007 and ending before 1 April 2017, in any of the North-Eastern States:
- begins to manufacture or produce any eligible article or thing; or
- undertakes substantial expansion to manufacture or produce any eligible article or thing; or
- carries on any eligible business.
Conditions the undertaking must meet
An undertaking must also satisfy both of these conditions:
- It is not formed by splitting up, or the reconstruction, of a business already in existence (other than an undertaking re-established, reconstructed or revived in the circumstances and within the period specified for the Section 140(4) exception).
- It is not formed by transferring to a new business machinery or plant previously used for any other purpose - the same rules applied for this purpose under Section 140(5) and (6).
"Eligible article or thing" and "eligible business"
"Eligible article or thing" excludes: goods falling under Chapter 24 of the Central Excise Tariff (tobacco and manufactured tobacco substitutes); pan masala under Chapter 21; plastic carry bags of less than twenty microns as specified by the Ministry of Environment and Forests notifications referred to in the section; and goods falling under Chapter 27 (produced by petroleum oil or gas refineries).
"Eligible business" is defined to mean the business of:
- Hotel (not below two-star category)
- Adventure and leisure sports including ropeways
- Providing medical and health services in the nature of a nursing home with a minimum capacity of 25 beds
- Running an old-age home
- Operating a vocational training institute for hotel management, catering and food craft, entrepreneurship development, nursing and para-medical, civil aviation-related training, fashion designing and industrial training
- Running an information technology-related training centre
- Manufacturing of information technology hardware
- Bio-technology
Other rules
No deduction is allowed under any other section of this Chapter in relation to the profits and gains of the same undertaking - the Section 143 deduction cannot be stacked with another Chapter VIII deduction on the same profits.
No deduction is allowed under Section 143 where the total period of deduction (inclusive of the period claimed under this section or under the second proviso to section 80-IB(4) of the Income-tax Act, 1961) exceeds ten tax years.
The rules in Section 140(7) to (6) [as continued from the corresponding sub-sections of Section 140] apply, so far as may be, to an eligible undertaking under Section 143.
Key definitions
| Term | Meaning |
|---|---|
| Initial tax year | The tax year in which the undertaking begins to manufacture or produce articles or things, or completes substantial expansion |
| North-Eastern States | Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura |
| Substantial expansion | An increase in the investment in plant and machinery by at least 25% of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the tax year in which the substantial expansion is undertaken |
Frequently asked questions
Can a new North-Eastern-State undertaking claim Section 143 today?
The section only covers undertakings that began manufacturing, undertook substantial expansion, or started an eligible business during the window from 1 April 2007 to before 1 April 2017, so it applies to undertakings set up within that specific period.
How long can the deduction be claimed?
100% of profits and gains from the eligible business for ten consecutive tax years, commencing with the initial tax year, subject to the ten-year overall cap when combined with certain deductions under the 1961 Act.
Can the undertaking also claim another Chapter VIII deduction on the same profits?
No - Section 143(5) expressly bars claiming a deduction under any other section of Chapter VIII in relation to the profits and gains of the same undertaking.
Related sections
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Talk to our tax team about North-Eastern States tax benefitsLast updated 9 September 2026