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Gross Annual Value rule for house property: higher of municipal or fair rent subject to standard rent cap.
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Deduction under Section 80GG determined as the least of three statutory measures; example illustrates rent-based cap applies.
Deduction under Section 80GG is the least of: (1) Rs. 2,000 per month (Rs. 24,000 per annum); (2) rent paid less 10% of total income; and (3) 25% of total income. In the supplied example with total income of Rs. 3,00,000 and rent paid Rs. 1,50,000, the three measures are Rs. 24,000; Rs. 1,20,000; and Rs. 75,000 respectively, so Rs. 24,000 is the allowable deduction under the prescribed formula.
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Deduction under 80G requires a stamped receipt showing the trust's registration number and valid registration on donation date.
Deduction u/s. 80G requires a stamped receipt evidencing the donation that records the trust's registration number for 80G, and the trust's registration must be valid on the date the donation is made; lacking validity or the registration number on the receipt affects entitlement to the deduction.
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Donation deduction eligibility: employer certificate confirming salary deduction enables employee claim of 80G deduction on donations.
Employees may claim a deduction under 80G where the employer provides a certificate stating the contribution was made from the employee's salary account; that employer statement operates as the operative documentary basis for the employee's deduction claim even if the donation receipt is in the employer's name.
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Whether donations to foreign trusts qualify for deduction under section 80G is a focused eligibility question hinging on whether the recipient trust is a qualifying donee and whether its registration, recognition, domicile or jurisdictional status and accompanying documentary proof and procedural compliance satisfy the statutory conditions for claiming a deduction.
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Deduction for specified diseases: treatment costs for listed serious neurological, oncological, renal and hematological ailments qualify.
Deduction for medical treatment is available for specified diseases and ailments: neurological disorders (including certified disability of 40% or above, dementia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus, aphasia, Parkinson's), malignant cancers, full blown AIDS, chronic renal failure, and hematological disorders such as hemophilia and thalassaemia.
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Deduction under section 80DD: a cousin does not qualify as a dependent for claiming the deduction.
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Disability deduction eligibility: a dependent sibling may claim 80DD deduction if financially supporting the disabled dependent.
An Assessing Officer's objection that the son cannot claim the deduction because Mr. X receives pension is incorrect. Deduction under section 80DD covers dependents including brothers and sisters; the son may claim the deduction if the disabled daughter is dependent on him. The son should furnish an undertaking from Mr. X confirming the daughter's dependency on the son rather than on Mr. X.
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Disabled dependent eligibility for income tax deductions requires relatives or HUF members to be wholly or mainly dependent.
Eligibility for deductions requires that the disabled person be wholly or mainly dependent on the claimant for support and maintenance. For individuals, eligible dependents include spouse, children, parents, brothers and sisters. For a HUF, any member of the HUF may be treated as a disabled dependent for claiming the deduction.
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Disability definition sets qualifying conditions and severity thresholds for income-tax deductions for specified impairments under tax law.
Definition of disability for income-tax deductions under sections 80DD and 80DDB follows the Persons with Disabilities Act, 1995, listing impairments such as blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness, autism, cerebral palsy and multiple disabilities; a person is considered disabled when impairment is not less than 40%, and severe disability is an impairment of 80% or more, which determine eligibility for the specified deductions.
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Health insurance deduction allowed when employee bears premium paid non-cash and obtains employer certificate confirming the deduction.
A deduction under section 80D is available where the employee has paid medical insurance premiums for himself and/or his family by a non-cash mode; the employee should obtain an employer's certificate confirming deduction of the amount for medical insurance purposes.
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Deduction under section 80D requires payment from taxable income; payments from exempt income or loans disqualify.
Deduction under section 80D is available only where the payment is made out of income chargeable to tax; payments from tax-exempt income or from borrowed funds do not qualify for the deduction.
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Medical insurance deduction under 80D varies by parental senior citizen status, affecting combined family and parental premium allowances.
Deduction under 80D allows an individual who pays medical insurance premiums other than in cash to claim a deduction for premiums for the assessee, spouse and dependent children as one component and for parental premiums as a separate component; the total allowable deduction depends on whether any parent is a senior citizen, with a higher combined deduction if a parent is a senior citizen.
Manuals Income Tax
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Deduction under section 80D: contributors who pay health insurance premiums non cash may claim proportional deductions
Contributors who partly pay health insurance premiums may each claim a deduction equal to the amount they actually paid, provided each share is paid directly to the insurer and by a mode other than cash; in such cases each payer may claim the deduction against their respective taxable income.
Manuals Income Tax
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Deduction under 80CCG limited by eligible investment percentage and income threshold, with recapture on scheme violation.
Deduction under the Rajiv Gandhi Equity Savings Scheme is computed as a percentage of eligible investments in listed equity shares and equity oriented fund units but is restricted by a monetary ceiling; sale of previously qualifying units can breach scheme conditions and cause partial recapture as taxable income; exceeding the prescribed gross total income threshold disqualifies the taxpayer from claiming the deduction for that year.
Manuals Income Tax
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Deduction under section 80CCE limits combined 80C and 80CCC claims for contributions to savings instruments.
Contributions to Public Provident Fund and an annuity policy eligible under Section 80CCC are deductible but subject to the aggregate ceiling under Section 80CCE; when combined eligible deductions across Sections 80C and 80CCC exceed the statutory limit, the deductible amount is restricted to that ceiling and any excess is disallowed.
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Aggregate deduction under section 80CCE limits combined 80C and 80CCC contributions to the statutory overall ceiling.
Contributions to a public provident fund and annuity policy premiums are aggregated and the deductible amount is the lesser of the combined eligible contributions and the statutory aggregate ceiling; when the combined total exceeds that ceiling, the deduction is restricted to the statutory limit.
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Deduction under 80C: eligible life insurance premiums allowed up to policy ceilings; excess disallowed; one policy's maturity taxable.
Deduction under Section 80C allows life insurance premiums up to policy wise ceilings based on a percentage of the sum assured. Policy A (sum assured 200,000) with a ceiling of 20% permits the full 25,000 premium as deductible; Policy B (sum assured 100,000) with a ceiling of 10% permits only 10,000 of the 12,000 premium as deductible. The total deduction equals the aggregate of eligible premiums, and Policy B's maturity proceeds are not exempt from tax.

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Comparison of Section 28 "Rent, rates, taxes, repairs and insurance" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

21 August, 2025

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Section 28 Rent, rates, taxes, repairs and insurance.

Income-tax Act, 2025 [As Passed]

At a Glance

Document considered: Clause 28 of the Income Tax Bill, 2025 (Old Version) titled "Rent, rates, taxes, repairs and insurance." It sets out categories of deductible expenditures in computing profits and gains of business or profession. It matters to taxpayers carrying on business or profession, lessors/tenants and tax authorities. Effective date or decision date: Not stated in the document.

Background & Scope

Statutory hook: Clause 28 of the Income Tax Bill, 2025 dealing with "Profits and gains of business or profession." Scope: provides that specified amounts shall be allowed as deduction in respect of premises, machinery, plant or furniture "wholly and exclusively" used for business or profession. The clause enumerates categories (insurance premium, land revenue/local rates/municipal taxes, rent when tenant, current repairs when occupied otherwise than as a tenant, and cost of repairs when premises occupied by the assessee as a tenant). Definitions or further explanations: Not stated in the document.

Statutory Provision Mode

Text & Scope

The provision covers deductions in computing business/professional profits for expenses in respect of premises, machinery, plant or furniture that are "wholly and exclusively" used for business/profession. Enumerated deductible items are:

  • (a) any premium paid in respect of insurance against risk of damage or destruction of the assets;
  • (b) land revenue, local rates or municipal taxes paid;
  • (c) rent paid where the premises are occupied by the assessee as a tenant;
  • (d) amount paid on account of current repairs, not being capital expenditure, when premises are occupied otherwise than as a tenant;
  • (e) cost of repairs, not being capital expenditure, when the premises are occupied by the assessee as a tenant.

Subsection (2) provides that where the asset is partly used or not wholly and exclusively used for business/profession, deduction under subsection (1) shall be restricted to a fair proportionate part as determined by the Assessing Officer, having regard to usage for business/profession.

Interpretation

The text conditions deductions on assets being "wholly and exclusively" used for business/profession; that phrase operates as a threshold requirement. The enumeration is restrictive: only specified categories qualify. The use of the phrase "not being capital expenditure" signals an intention to exclude capital improvements from deduction, limiting allowance to current/repair-type expenditure. The mechanism in subsection (2) entrusts apportionment to the Assessing Officer, implying case-by-case factual determination of proportionate business use.

Exceptions/Provisos

No express provisos, thresholds, or procedural conditions appear in Clause 28 beyond the "wholly and exclusively" condition and the exclusion of capital expenditure. Specific exceptions (e.g., measuring apportionment methods, documentation requirements) are Not stated in the document.

Illustrations

  • Example 1: A manufacturing firm uses a factory building solely for manufacturing; premium paid for insurance on the building would be deductible under clause (a) because the premises are wholly and exclusively used for business.
  • Example 2: A proprietor runs a business from part of a building and uses part for private residence. Only a fair proportionate part of municipal taxes and repairs, as determined by the Assessing Officer, would be deductible under subsection (2).
  • Example 3: A tenant pays rent for business premises; rent paid is deductible under clause (c) provided the premises are wholly and exclusively used for business.

Interplay

Interaction with other statutory provisions, Rules, Notifications or Circulars is Not stated in the document. The clause's reference to determination by the Assessing Officer suggests interaction with assessment procedures under the Income-tax Code, but specific cross-references are Not stated in the document.

Differences between Section 28 of Income-tax Act, 2025 [As Passed] and Clause 28 of Income Tax Bill, 2025 - Old Version

  • Scope of use: The Old Version (Clause 28) conditions deductions on premises, machinery, plant or furniture being "wholly and exclusively" used for the purposes of business or profession. The Passed Act (Section 28) omits "wholly and exclusively" and allows deductions in respect of such assets "used for the purposes of the business or profession," thereby broadening applicability.
  • Repairs to machinery/plant/furniture: The Passed Act adds a new sub-clause (f) expressly permitting deduction for "current repairs to machinery, plant or furniture, not being in the nature of capital expenditure." The Old Version contains no equivalent clause.
  • Tenant repairs: The Old Version's clause (e) refers to "cost of repairs, not being capital expenditure, when the premises occupied by the premises occupied by the assessee as a tenant" (contains a drafting repetition). The Passed Act's clause (e) clarifies that the deduction applies where the premises are occupied by the assessee as a tenant and "where he has undertaken to bear the cost of repairs to the premises." Thus the Passed Act adds an explicit requirement that the tenant has undertaken responsibility for repairs.
  • Wording on capital expenditure: The Old Version uses the phrase "not being capital expenditure"; the Passed Act uses "not being in the nature of capital expenditure." This is a drafting refinement but may have interpretive significance.
  • Assessing Officer determination: Both versions retain subsection (2) restricting deduction to a fair proportionate part where assets are partly used or not wholly and exclusively used; text is substantially the same though the Old Version's trigger language references "wholly and exclusively" use while the Passed Act's trigger is broader given the removal of that phrase in subsection (1).
  • Minor drafting: The Old Version appears to contain a typographical repetition in clause (e). The Passed Act corrects and expands the drafting.

Practical impact of each change

  • Removal of "wholly and exclusively": Broadens entitlement to deductions where assets are partly used for business/profession - potentially increasing allowable deductions but subject to apportionment under subsection (2).
  • Addition of repairs to plant/machinery/furniture: Clarifies and expressly allows current repair deductions for tangible assets beyond premises - likely reduces disputes where such repairs were previously not expressly listed.
  • Tenant repair undertaking requirement: Tightens the conditions for a tenant's deduction for repairs by requiring an undertaking to bear repair costs - may limit deductions where no express undertaking exists.
  • Drafting refinement ("in the nature of"): May affect interpretation in borderline cases by focusing on the character of expenditure, rather than the technical label "capital expenditure."
  • Subsection (2) retained: Apportionment by the Assessing Officer remains the mechanism to deal with mixed-use assets; practical disputes may shift from entitlement to apportionment methodology.

Practical Implications

  • Compliance and risk areas: Taxpayers must establish that assets are "wholly and exclusively" used for business or profession to claim full deductions. Where use is mixed, subsection (2) exposes taxpayers to assessment-time apportionment. The exclusion of capital expenditure demands careful classification of spending as current repair versus capital improvement to avoid disallowance.
  • Record-keeping/evidence points: Although the clause does not prescribe records, the textual requirements imply that taxpayers should retain evidence of exclusive business use (floor plans, usage logs), invoices and nature-of-expenditure documentation to substantiate repairs as current (versus capital). Where a tenant seeks deduction for repairs, documentation of tenancy terms and any undertaking to bear repairs is likely to be material-however, the Bill does not state precise documentary requirements.

Key Takeaways

  • Clause 28 enumerates limited categories of deductible expenses relating to premises, machinery, plant and furniture for business/profession.
  • Full deduction in the Old Version is conditioned on assets being "wholly and exclusively" used for business or profession.
  • Capital expenditure is excluded; only current repairs or recurring costs qualify under the repair heads.
  • Subsection (2) permits apportionment for mixed-use assets by the Assessing Officer on a fair proportionate basis.
  • The Bill does not set out procedural, evidentiary or measurement standards; those are Not stated in the document.
  • Ambiguities likely to arise concern classification of expenditure (current v. capital), proving "wholly and exclusively" use, and apportionment methodology.
  • Specific operational details (effective date, transitional rules, forms or rulings) are Not stated in the document.

Full Text:

Section 28 Rent, rates, taxes, repairs and insurance.

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Acts Income Tax