Section 80IB of the Income Tax Act In India 2025

In order to promote faster and more robust development of new and emerging industries, Section 80IB offers certain industrial businesses a sizable tax break on their profits.

What Is Section 80IB?

Section 80IB of the Income-Tax Act allows an industrial enterprise that produces or manufactures goods (or runs one or more cold-storage plants) and satisfies additional requirements to deduct money from its profits and gains. 

Who Qualifies Under Section 80IB?

You can claim a deduction if the undertaking:

• Is not formed by splitting up or reconstructing an existing business;
• Has not transferred machinery/plant previously used for another purpose
• Manufactures or produces an article/thing (not listed in Eleventh Schedule) or operates a cold-storage plant;
• Meets location-based conditions: e.g., in a backward state, you may get 100% deduction for the first five years.
   

How Much Deduction Is Allowed?

• For industrially backward states (Eighth Schedule), you could get 100% deduction of “profits and gains” for five assessment years beginning with the initial year; then 25% (or 30% for a company) for the next year.
   
• For other areas, the deduction rate may be 25% (30% for companies) for up to ten years.
   

Example: Making It Real

Imagine GreenMach Industries, set up in a backward district of Uttar Pradesh, begins production in FY 2024-25 and earns ₹50 lakh profit in that year. Under Section 80IB, assuming eligibility, GreenMach could claim 100% deduction on that ₹50 lakh for the first assessment year — meaning no tax on that profit. Next year will follow the pattern (deduction rate and period based on location and business type).

Conclusion

To conclude, simply maintain your documentation in order, thoroughly understand the requirements for eligibility, and take advantage of this chance to realise your business idea. After all, effective tax preparation now creates the foundation for a more robust and competitive future.