Section 10BA of Income Tax Act 1961: Export of Certain Articles or Things
Section 10BA was a special deduction provision for profits derived by qualifying undertakings from export out of India of specified handmade artistic articles or things. It is now relevant mainly for historical and legacy matters.
What did Section 10BA provide?
Under the Income-tax Act, 1961, Section 10BA allowed a deduction of profits and gains derived by an eligible undertaking from export out of India of eligible articles or things, subject to the conditions contained in the section.
The provision also prevented overlapping benefits. If deduction under Section 10A or Section 10B had been claimed while computing the undertaking's total income for an assessment year, deduction under Section 10BA was not available for that undertaking for that year.
Conditions that applied to an undertaking
For the historical deduction, the undertaking was required to satisfy the statutory conditions. In substance, these included the following:
| Condition | Requirement under Section 10BA |
|---|---|
| Manufacture or production | The undertaking manufactured or produced eligible articles or things without using imported raw materials. |
| New undertaking | It was not formed by splitting up or reconstruction of an existing business, subject to the statutory exception linked to Section 33B. |
| Used machinery or plant | It was not formed by transfer to a new business of machinery or plant previously used for any purpose, subject to the rules incorporated by reference in the section. |
| Export sales | Ninety per cent or more of its sales during the relevant previous year were exports of eligible articles or things. |
| Workers | It employed twenty or more workers during the previous year in the manufacturing or production process. |
Receipt of export proceeds in convertible foreign exchange
Section 10BA required the sale proceeds of eligible articles or things exported out of India to be received in, or brought into, India in convertible foreign exchange within six months from the end of the previous year, or within a further period allowed by the competent authority.
For this purpose, the competent authority meant the Reserve Bank of India or another authority authorised under the law in force to regulate payments and dealings in foreign exchange.
How were export profits calculated?
Sub-section (4) prescribed a proportionate formula based on export turnover and total turnover of the undertaking:
Eligible export profit = Profits of the business of the undertaking x Export turnover of eligible articles or things / Total turnover of the business of the undertaking
Accountant's report and restriction on double deduction
The deduction was not admissible unless the assessee furnished the prescribed accountant's report with the return of income, certifying that the deduction had been correctly claimed in accordance with Section 10BA.
Where deduction was allowed under Section 10BA, the section barred another deduction under any other provision in respect of the same export profits. It also applied specified provisions of Section 80-IA, so far as applicable, to the undertaking.
Important definitions under Section 10BA
Convertible foreign exchange
Foreign exchange treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 and the applicable rules or corresponding law.
Eligible articles or things
Handmade articles or things of artistic value that require the use of wood as the main raw material.
Export turnover
The consideration for export of eligible articles or things received in, or brought into, India in convertible foreign exchange in accordance with the section. It excluded freight, telecommunication charges and insurance attributable to delivery outside India.
Export out of India
The definition excluded a sale or similar transaction in a shop, emporium or other establishment situated in India that did not involve clearance at a customs station as defined in the Customs Act, 1962.
Section 10BA and the law after 1 April 2026
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. The 1961 Act nevertheless continues to matter for earlier tax years and proceedings under the savings and transition provisions. Since Section 10BA had already stopped granting deductions from AY 2010-11 onward, this page is best used as a reference for historical claims, disputes, assessments, appeals and interpretation of the former provision.
Official resources
This article is intended as a legal and tax reference. For a particular assessment year or pending proceeding, the applicable statutory text, amendments, rules, notifications and case law should be checked.