What is Section 80LA in India 2025

Section 80LA allows specific financial institutions to claim a deduction on their income earned from qualifying activities in IFSCs or SEZs. The goal is to boost offshore banking, international finance, and export-oriented services from India.

In short, if a bank or financial unit earns income from international transactions within an approved SEZ or IFSC, it can save a good portion of tax under this section.

Section 80LA of Income Tax Act -  Eligibility, and Benefits

Section 80LA of the Income Tax Act, provides tax advantages to banks and other financial institutions that operate in Special Economic Zones (SEZs) or International Financial Service Centres (IFSCs). By providing beneficial tax deductions to qualified entities, this section aims to establish India as a major international financial centre.

Who Can Claim Deduction Under Section 80LA?

The deduction is available to:

• Scheduled banks operating an Offshore Banking Unit (OBU) in a Special Economic Zone.
• Banks incorporated outside India with OBUs in India.
• Units located in an International Financial Services Centre (IFSC).
   

How Much Deduction is Allowed?

• 100% of eligible income for the first five assessment years, starting from when the unit begins operations.
• 50% of eligible income for the next five assessment years.
   

That means an eligible unit enjoys tax relief for a total of 10 consecutive years.

Conditions to Claim Section 80LA Deduction

To claim this benefit, the entity must:

• Have approval from the Reserve Bank of India (RBI) or IFSC Authority.

Maintain separate books of accounts for the eligible unit.

• File a CA certificate (Form 10CCF) along with the income tax return.
   

Example of How 80LA Works

Let’s say an Indian bank runs an OBU in the GIFT City IFSC and earns ₹15 crore in eligible income during the first year. Under Section 80LA, the bank can deduct the entire ₹15 crore from its taxable income, leading to huge tax savings.

Conclusion

Section 80LA of the Income Tax Act is designed to make India a competitive global finance destination. For banks and IFSC units, this section offers a decade-long tax benefit — provided they follow all compliance steps carefully.

If you’re part of an IFSC or SEZ financial setup, this deduction is worth exploring to make your operations more tax-efficient.