CBDT Adds Sikkim to ITR-3 & ITR-5 Forms for Section 80-IE Deductions
In a recent move to ensure accurate representation of eligible states, the CBDT has issued a corrigendum to the ITR-3 and ITR-5 forms for AY 2025–26. The update adds “Sikkim” as item “ah” in Schedule 80-IE, enabling eligible businesses in Sikkim to now claim the deduction formally under the new tax forms.
Let’s break down what this means for taxpayers and professionals.
What Is Section 80-IE Deduction?
Section 80-IE of the Income-tax Act, 1961 allows 100% profit-based deductions for 10 years for certain businesses in North-Eastern and Himalayan states, including Sikkim, Assam, Nagaland, etc.
Eligible undertakings must:
- Be set up between 01.04.2007 and 31.03.2017
- Be involved in manufacturing or production
- Not be formed by splitting or reconstruction of existing units
What’s Changed in ITR-3 and ITR-5?
| Aspect | Before Corrigendum | After Corrigendum |
|---|---|---|
| Schedule 80-IE | Did not include “Sikkim” | “ah. Sikkim” added as a valid state |
| Forms Affected | ITR-3, ITR-5 | ITR-3, ITR-5 (Revised via Corrigendum) |
| Compliance Impact | Manual disclosures or ambiguity | Proper selection available in dropdown |
| Effective Assessment | AY 2025–26 | AY 2025–26 onward |
Notification Ref: CBDT Corrigendum dated 28.05.2025 to Notification No. 41 & 42/2025-Income Tax.
🔗 Source – incometaxindia.gov.in
Why This Matters for Taxpayers in Sikkim
Previously, Sikkim-based businesses eligible under Section 80-IE deduction had no dedicated option in the utility. This led to:
- Inaccurate data filing
- Delayed assessments or scrutiny
- Compliance mismatch with tax audit reports
Now with “Sikkim” formally included:
- Deductions are easier to claim
- No more workaround entries
- Aligns form logic with Income Tax Act intent
Expert View: Practical Tip for CA Firms & SMEs
“Always download the latest utility version from the official portal before filing. Even small corrigendums like this can affect deduction claims, especially in high-benefit zones like the NE states.”
— Tax Consultant, Efiletax
How to Claim Section 80-IE Deduction in AY 2025–26
- Select ITR-3 or ITR-5 based on your business status
- In Schedule 80-IE, choose “ah. Sikkim” from the dropdown
- Enter deduction-eligible profit details
- Match with tax audit and books
- File return using updated utility (Ver. 1.1 onwards)
Additional Compliance Notes
- Cross-verify with previous years’ CPC acknowledgments if already claiming the deduction
- Keep documentation for date of setup, manufacturing process, and location proof
Related Reads
📖 ITR-1 and ITR-4 Changes for AY 2025–26 – New Disclosures and Formats
Frequently Asked Questions (FAQs)
Q1. Is this change applicable for FY 2023–24 or 2024–25?
Applicable from AY 2025–26, i.e., for FY 2024–25 returns.
Q2. Can ITR-3 and ITR-5 be filed using the old version now?
No. Use the latest utility version after corrigendum inclusion.
Q3. Is the deduction under Section 80-IE automatic?
No. You must opt for it in the schedule and meet all conditions.
Summary
CBDT updates ITR-3 and ITR-5 for AY 2025–26 to include “Sikkim” in Schedule 80-IE. Eligible businesses in Sikkim can now claim tax deduction under Section 80-IE with proper state code selection in ITR utility.
Final Word: File with Confidence
If you’re a business based in Sikkim or NE states, don’t miss this update.
Use the revised ITR forms, claim your 100% tax holiday, and ensure clean compliance with Efiletax by your side.