Ans: No, sub-clause (ii)(b) of Section 40A disallows deductions for the computation of income taxes from profits and gains of state undertakings.  Before March 1 2014, the state government undertakings could claim deductions on special levies given to the respective governments. This led to disputes with the Income Tax Department for minimising income tax liabilities. As a result, the Finance Act of 2013 introduced the above sub-clause to safeguard the tax base.