Section 10C of the Income-tax Act: Industrial Undertakings in the North-Eastern Region
Section 10C provided a time-limited income-tax exemption for profits of qualifying manufacturing undertakings in notified industrial centres in India's North-Eastern Region. The exemption is no longer available for assessment year 2004-05 or any later year.
What did Section 10C provide?
Section 10C(1) excluded from total income the qualifying profits and gains of an industrial undertaking manufacturing or producing articles or things on or after 1 April 1998 in a notified Integrated Infrastructure Development Centre or Industrial Growth Centre in the North-Eastern Region. Section 10C(3) specified a ten-consecutive-assessment-year benefit beginning with the assessment year linked to commencement of manufacturing or production.
However, the later proviso inserted into Section 10C(6) terminated the benefit from assessment year 2004-05, even where an undertaking had not completed its originally contemplated ten-year period. See the official Section 10C text.
Eligibility requirements under Section 10C(2)
For the historical exemption, the undertaking had to satisfy the statutory location and manufacturing requirements and the following conditions:
- It was not formed by splitting up or reconstructing an existing business, subject to the limited statutory exception for revival or reconstruction covered by Section 33B.
- It was not formed by transferring previously used plant or machinery to a new business, subject to the rules incorporated from the explanations to Section 80-IA(3).
- It operated in a qualifying centre notified by the Central Government within the specified North-Eastern Region.
The restriction on previously used machinery should be read with the applicable statutory explanations and facts for the relevant historical assessment year.
Definitions in the Explanation to Section 10C
Integrated Infrastructure Development Centre
A centre located in a North-Eastern State and specified by Central Government notification for the purposes of Section 10C.
Industrial Growth Centre
An industrial growth centre in a North-Eastern State similarly specified by Central Government notification. Merely being located in the region did not, by itself, establish eligibility.
North-Eastern Region
The statutory definition covers Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura.
Relevant assessment years
The original ten consecutive assessment years starting with the assessment year related to commencement of manufacture or production, subject to the later statutory cutoff.
Depreciation, losses and other deductions
Section 10C(4) contained special rules for depreciation, written-down value, certain expenditure allowances, carry-forward or set-off of losses relating to the exempt undertaking, and prevention of overlapping deductions under specified provisions such as Sections 80HH, 80HHA, 80-I, 80-IA, 80-IB and 80JJA. Section 10C(5) applied relevant anti-abuse and transfer-pricing-related rules of Section 80-IA(8) and (10).
Under Section 10C(6), an assessee could submit a written declaration to the Assessing Officer by the due date under Section 139(1) to opt out of Section 10C for the relevant assessment years. These provisions should be applied according to the statutory wording in force for the historical year concerned.
Position under the Income-tax Act, 2025
The Income-tax Act, 2025 came into force on 1 April 2026 and replaced the Income-tax Act, 1961 for tax years beginning on or after that date. Transitional rules preserve the application of the earlier law to earlier tax years and related proceedings. As Section 10C had already ceased to grant deductions from AY 2004-05, the 2025 Act does not revive this historical benefit. Consult the Income Tax Department's transition guidance for the applicable regime.
Section 10C should not be confused with Section 80-IC or Section 80-IB, which address different industrial deductions and have their own conditions and time limits.
Frequently asked questions
Can a business claim Section 10C in 2026?
No. The statutory cutoff disallows Section 10C deductions for AY 2004-05 and later years.
Did the original law promise ten years of relief?
The original framework referred to ten consecutive assessment years, but the later cutoff expressly ended availability from AY 2004-05.
Was every manufacturing unit in the North-East eligible?
No. The undertaking needed to be in a qualifying notified centre and satisfy the other statutory conditions.
Original statutory text and amendment notes
The following material is retained from the earlier webpage for historical reference. It may contain original editorial footnote markers; consult the official legislation for authoritative wording.
Read the historical Section 10C extract
1(1) Subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking, which has begun or begins to manufacture or produce any article or thing on or after the 1st day of April, 1998 in any Integrated Infrastructure Development Centre or Industrial Growth Centre located in the North-Eastern Region (hereafter in this section referred to as the industrial undertaking) shall not be included in the total income of the assessee.
(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:-
(i) it is not formed by the splitting up, or the reconstruction of, a business already in existence:
Provided that this condition shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section;
(ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
Explanation.-The provisions of Explanation 1 and Explanation 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause (ii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section.
(3) The profits and gains referred to in sub-section (1) shall not be included in the total income of the assessee in respect of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things.
(4) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee of any previous year relevant to any subsequent assessment year,-
(i) section 32, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if deduction referred to therein and relating to or allowable for any of the relevant assessment years, in relation to any building, machinery, plant or furniture used for the purposes of the business of the industrial undertaking in the previous year relevant to such assessment year or any expenditure incurred for the purposes of such business in such previous year had been given full effect to for that assessment year itself and, accordingly, sub-section (2) of section 32, sub-section (4) of section 35 or the second proviso to clause (ix) of sub-section (1) of section 36, as the case may be, shall not apply in relation to any such deduction;
(ii) no loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) of section 74, in so far as such loss relates to the business of the industrial undertaking, shall be carried forward or set off where such loss relates to any of the relevant assessment years;
(iii) no deduction shall be allowed under section 80HH or section 80HHA or section 80-I or section 80-IA or section 80-IB or section 80JJA in relation to the profits and gains of the industrial undertakings; and
(iv) in computing the depreciation allowance under section 32, the written down value of any asset used for the purposes of the business of the industrial undertaking shall be computed as if the assessee had claimed and been actually allowed the deduction in respect of depreciation for each of the relevant assessment years.
(5) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, apply in relation to the industrial undertaking referred to in this section as they apply for the purposes of the industrial undertaking referred to in section 80-IA or section 80IB, as the case may be.
(6) Notwithstanding anything contained in the foregoing provisions of this section, where the assessee before the due date for furnishing the return of his income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him in any of the relevant assessment years:
2 Provided that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 2004 and subsequent years. Explanation.-For the purposes of this section,-
(i) "Integrated Infrastructure Development Centre" means such centres located in the States of the North-Eastern Region, which the Central Government, may, by notification in the Official Gazette, specify for the purposes of this section;
(ii) "Industrial Growth Centre" means such centres located in the States of the North-Eastern Region, which the Central Government may, by notification in the Official Gazette, specify for the purposes of this section;
(iii) "North-Eastern Region" means the region comprising the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;
(iv) "relevant assessment years" means the ten consecutive years beginning with the year in which the industrial undertaking begins to manufacture or produce articles or things.
---------------------- 1. Ins. by Act 27 of 1999, s. 7 (w.e.f. 1-4-1999). 2. Ins. by Act 32 of 2003, s. 9 (w.e.f. 1-4-2004).
1. Ins. by Act 27 of 1999, s. 7 (w.e.f. 1-4-1999). 2. Ins. by Act 32 of 2003, s. 9 (w.e.f. 1-4-2004).
2. Ins. by Act 32 of 2003, s. 9 (w.e.f. 1-4-2004).
Official legislation and guidance
- Income Tax Department: Section 10C, Income-tax Act, 1961
- Income-tax Act, 1961, as amended (official PDF)
- Income Tax Department: Objective and scope of the Income-tax Act, 2025
- Income Tax Department e-Filing portal
Disclaimer: This article is general legal information. For an old assessment, use the law and notifications applicable to the relevant year.