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Union Budget 2026-27 - Finance Bill, 2026
Section 536(2)(h) of the Act provides that where any deduction has been allowed or any amount has not been included in the total income under the repealed Income-tax Act, 1961, subject to fulfilment of certain conditions, then on violations of such conditions, such amount will be deemed to be income in the tax year in which violation takes place.58
2. However, there are provisions in the repealed Act, where any deduction allowed or any income which has not been included in the total income under the repealed Income-tax Act, 1961 may have to be included as income as per the provisions of the Income-tax Act, 1961 under the provisions of Income-tax Act, 2025, even without violations of any conditions. Section 536(2)(h) presently does not cover these cases.
3. Thus, to include such situations, it is proposed that where any sum has been allowed as deduction or has not been included in the total income under the repealed Income-tax Act, 1961, such sum will be deemed to be income under Income-tax Act, 2025, even without violations of any conditions, if it was to be included in the total income under the provisions of Income-tax Act, 1961 had it not been repealed.
4. It is proposed to amend section 536(2)(h) of the Act.
5. The amendment will take effect from the 1st day of April, 2026 and will, accordingly, apply to tax year 2026-27 and subsequent tax years.
[Clause 107]
Full Text:
Tax treatment: previously allowed deductions or excluded amounts will be treated as income under the new Act from 2026 27 onward. Amendment to section 536(2)(h) provides that sums allowed as deductions or not included under the repealed Income-tax Act, 1961 will be deemed income under the Income-tax Act, 2025 if they would have been includible under the 1961 Act, even without any violation of prior conditions, effective 1 April 2026 for tax year 2026-27 onward. of Press 'Enter' after typing page number.
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