IT Act 2025 · Tax Year 2026-27
Detailed Explainer
In-depth analyses of specific Income Tax Act 2025 provisions — complete tax treatment with tables, calculation walk-throughs, diagrams, and worked examples all in plain English.
Showing 8 of 8 analyses
Taxation in Case of Buyback of Securities
Complete tax treatment of share buybacks — both in the hands of the company and the shareholder, including the special additional tax that applies when the seller is a promoter.
Deemed Dividend — Loans or Advances by Closely Held Companies
When an unlisted closely held company gives loans or advances to certain shareholders or related concerns, those loans are treated as 'deemed dividend' in the hands of the recipient — even if no actual dividend is declared.
Agricultural Income — Exemption, Bifurcation & Partial Integration
What qualifies as agricultural income under Section 2(5), how Rule 270 splits field-to-factory income at the FMV pivot, how Rule 271 handles Tea/Coffee/Rubber with fixed percentage splits, and how partial integration raises the effective tax rate on non-agricultural income.
Cost of Acquisition of Shares — The Grandfathering Rule
How Section 90(7) steps up the cost of listed shares and MF units to their 31 Jan 2018 FMV, protecting pre-2018 gains from LTCG tax — with the master COA formula, three FMV determination cases, and fully worked examples for both listed shares (Mr. Prasun) and MF units (Mr. Raj).
Slump Sale — Tax on Transfer of Undertaking
A slump sale is the transfer of an entire undertaking or division for a lump-sum price, with no value assigned to individual assets or liabilities. Gain or loss is computed using Fair Value of Consideration (Rule 53) less Net Worth, and taxed as LTCG or STCG based on the 3-year holding rule.
Employer Deductions for Employee Welfare — PF, NPS & Gratuity
Section 29 allows employers to deduct contributions to provident funds, NPS, and gratuity funds from business income — subject to fund approval, actual payment, and prescribed limits. Employee contributions collected but not deposited on time are taxed as employer's business income.
Specified Business Deduction — 100% Capital Expenditure Write-Off
Section 46 of the IT Act 2025 allows businesses in 14 designated priority sectors to claim a 100% deduction on eligible capital expenditure. The provision is optional, covers sectors ranging from cold chain facilities to semiconductor manufacturing and infrastructure projects, and comes with strict conditions on depreciation, cash payments, asset holding period, and loss set-off.
Preliminary Expenses — Amortisation of Pre-Commencement Expenditure
Section 44 of the IT Act 2025 allows eligible resident assessees to claim deduction on preliminary expenses incurred before or after commencement of business, spread equally over 5 successive tax years. The deduction is subject to prescribed limits based on the cost of project and capital employed, and strict conditions around audit, documentation in Form 5, and availability on amalgamation and demerger.
Based on the Income Tax Act 2025 for Tax Year 2026-27. Educational reference only — verify with a Chartered Accountant before filing.