Insertion of new section 80-IAC

Q: When was Section 42 of the Finance Act enacted?

Section 42 of the Finance Act, cited as Finance Act 2016 42, was enacted on 27 Jun 2016. It is in force as at the date shown on this page.

In force As on 10 Oct 2026

Ministry Finance Enacted 27 Jun 2016 Cited by 1 provision

Section 42 of the Finance Act, 2016 deals with insertion of new section 80-IAC. Insertion of new section 80-IAC. 42. After section 80-IAB of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2017, namely:— '80-IAC. The Act was enacted on 27 Jun 2016.

Insertion of new section 80-IAC.
42. After section 80-IAB of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2017, namely:—
'80-IAC. Special provision in respect of specified business.—(1) Where the gross total income of an assessee, being an eligible start-up, includes any profits and gains derived from eligible business, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to one hundred per cent of the profits and gains derived from such business for three consecutive assessment years.
(2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any three consecutive assessment years out of five years beginning from the year in which the eligible start-up is incorporated.
(3) This section applies to a start-up which fulfils the following conditions, namely:—
(i) it is not formed by splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of a start-up which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as 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 1.— For the purposes of this clause, any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if all the following conditions are fulfilled, namely:—
(a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India;
(b) such machinery or plant is imported into India;
(c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee.
Explanation 2.—Where in the case of a start-up, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with.
(4) The provisions of sub-section (5) and sub-sections (7) to (11) of section 80-IA shall apply to the start-ups for the purpose of allowing deductions under sub-section (1).
Explanation.—For the purposes of this section,—
(i) "eligible business" means a business which involves innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property;
(ii) "eligible start-up" means a company or a limited liability partnership engaged in eligible business which fulfils the following conditions, namely:—
(a) it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019;
(b) the total turnover of its business does not exceed twenty-five crore rupees in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021; and
(c) it holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government.'.
(iii) "limited liability partnership" means a partnership referred to in clause (n) of sub-section (1) of section (2) of the Limited Liability Partnership Act, 2008 (6 of 2009).'.
Section 42, The Finance Act, 2016.

Cross-references

Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.

This section refers to

s. 80 Omission of sections 194K and 194L

Referred to by 1

Finance Act s. 36 Amendment of section 80-IAC

Questions about Section 42

What does Section 42 of the Finance Act deal with?

Section 42 of the Finance Act is headed "Insertion of new section 80-IAC". Insertion of new section 80-IAC. 42. After section 80-IAB of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2017, namely:— '80-IAC.

How do I find court cases under Section 42 of the Finance Act?

In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Finance Act 2016 42, section 42 Finance Act 2016, section 42 of the Finance Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome.

What should I read with Section 42 of the Finance Act, and has it changed?

Its own text turns on section 80 (Omission of sections 194K and 194L), so none of them can safely be read on its own. 1 other provision in this corpus refers back to it.

When was Section 42 of the Finance Act enacted?

Section 42 of the Finance Act, cited as Finance Act 2016 42, was enacted on 27 Jun 2016. It is in force as at the date shown on this page.

Other sections of this Act

Fourth Schedule. Fourth Schedule21791 words
Eighth Schedule. Eighth Schedule19903 words
First Schedule. First Schedule8145 words
2. Income-tax3742 words
222. Insertion of new Chapter III F2100 words
70. Substitution of new section for section 1531931 words

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(i)		it is not formed by splitting up, or the reconstruction, of a business already in existence:
		Provided that this condition shall not apply in respect of a start-up which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as 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 1.— For the purposes of this clause, any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if all the following conditions are fulfilled, namely:—

(a)		such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India;
(b)		such machinery or plant is imported into India;
(c)		no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee.

(i)		"eligible business" means a business which involves innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property;
(ii)		"eligible start-up" means a company or a limited liability partnership engaged in eligible business which fulfils the following conditions, namely:—

(a)		it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019;
(b)		the total turnover of its business does not exceed twenty-five crore rupees in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021; and
(c)		it holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government.'.