Duction for businesses engaged in collecting and processing of bio-degradable waste
[Section-145 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 145(1) of Income Tax Act 2025
145(1) If the gross total income of an assessee includes any profits and gains derived from the business of collecting and processing or treating of bio-degradable waste for,—
- (a) generating power; or
- (b) producing bio-fertilizers, bio-pesticides or biological agents; or
- (c) producing bio-gas; or
- (d) making pellets or briquettes for fuel or organic manure,
there shall be allowed a deduction equal to the whole amount of such profits and gains for five consecutive tax years, beginning with the tax year in which such business commences.
FAQs on Section 145 of Income Tax Act 2025
What is the purpose of Section 145(1) of the Income Tax Act, 2025?
To provide a tax deduction for businesses engaged in the collection and processing or treatment of bio-degradable waste for specified end uses.
Who is eligible to claim deduction under Section 145(1)?
Any assessee whose gross total income includes profits and gains from the business of collecting and processing or treating bio-degradable waste.
From which date is the deduction under Section 145(1) applicable?
The provision is applicable from the tax year beginning on 1st April, 2026.
What type of business activities are covered under Section 145(1)?
The business must involve collecting and processing or treating of bio-degradable waste for generating power, producing bio-fertilizers, bio-pesticides or biological agents, producing bio-gas, or making pellets or briquettes for fuel or organic manure.
How much deduction is allowed under Section 145(1)?
A deduction equal to the entire amount of profits and gains derived from the eligible business.
For how many years is the deduction available?
The deduction is allowed for five consecutive tax years.
When does the deduction period of five years begin?
It begins with the tax year in which the eligible business commences operations.
Is partial deduction allowed under Section 145(1)?
No, the entire profit and gain from the eligible business is deductible.
Does the deduction apply to existing businesses that start a new eligible activity?
Yes, provided the profits and gains are separately attributable to the newly commenced eligible business activity.
Can a business claim deduction for multiple eligible activities under Section 145(1)?
Yes, if all such activities involve processing or treatment of bio-degradable waste and the profits from each can be identified.
What happens if the business discontinues within the five-year period?
The Act does not specify clawback provisions; however, deduction would only be allowed for the years the business remains operational within the five-year period.
Does this deduction affect the computation of gross total income?
Yes, the profits and gains from the eligible business are deducted from the gross total income.
Can the deduction under Section 145(1) be claimed along with other deductions?
Yes, provided there is no double deduction claimed for the same profits under any other section.
Is there any cap or upper limit on the deduction amount?
No, the deduction is for the full amount of eligible profits and gains with no upper monetary limit.
Is a separate account or documentation required to claim this deduction?
Though not explicitly stated, maintaining separate accounts for the eligible business activity is advisable for verification and compliance.
Refresh Page