The term 'tax holiday', meaning a deduction of the whole of the profits of an eligible business for a…

Section 140 of the Income-tax Act, 2025 (formerly s.80-IAC of the Income-tax Act, 1961) allows an eligible start-up a deduction of 100% of the profits and gains of its eligible business. The deduction runs for three consecutive tax years, chosen by the assessee out of the ten years beginning with the year of incorporation, which is a classic tax holiday. Section 138 similarly continues the former s.80-IA infrastructure deduction for its remaining eligible years.

The other options are deductions linked to payments or savings, not profit-linked tax holidays. Section 126 is the deduction for health insurance premia (formerly s.80D). Section 123 is the deduction for life insurance premia, provident fund contributions and similar payments (formerly s.80C and s.80CCC). Section 153 is the deduction for interest on deposits (formerly ss.80TTA/80TTB).