Income Tax Act 2025 · Tax Year 2026-27

Detailed Explainer

Longer analyses of the provisions that are hard to apply from the bare text. Each one sets out the complete tax treatment with tables, a step-by-step computation, diagrams where they help, and worked examples, citing the section at every step.

analyses: 10; analyses

Showing 10 of 10 analyses

Sections 69 & 196 · was Section 46A & 115QA in the 1961 Act · Capital Gains

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.

Section 2(40)(e) · was Section 2(22)(e) in the 1961 Act · Special Income

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.

Section 2(5) & Rules 270–271 · was Section 2(1A) in the 1961 Act · Agricultural Income

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.

Section 90(7) · was Section 55(2)(ac) in the 1961 Act · Capital Gains

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).

Section 77 · was Section 50B in the 1961 Act · Capital Gains

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.

Section 29 · was Sections 36(1)(iv), 36(1)(iva) & 36(1)(v) in the 1961 Act · Business & Profession

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.

Section 46 · was Section 35AD in the 1961 Act · Business & Profession

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.

Section 44 · was Section 35D in the 1961 Act · Business & Profession

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.

Section 38 · was Sections 41, 32(1) proviso, 35(5), 36(1)(vii) in the 1961 Act · Business & Profession

Deemed Profits and Gains of Business or Profession

Section 38 of the IT Act 2025 deems certain receipts and events as taxable business income even when they are not earnings in the ordinary sense — covering recoveries against previously claimed deductions, balancing charges on sale of SLM-depreciated assets, proceeds from scientific research assets, recovery of bad debts, and withdrawals from special reserves.

Section 206(2) · was Section 115JC in the 1961 Act · Business & Profession

Alternate Minimum Tax (AMT)

AMT is a parallel tax computation for every assessee other than a company. Where profit-linked or investment-linked deductions cut the normal tax below 18.5% of Adjusted Total Income, the assessee pays AMT instead — and carries forward the difference as AMT credit for up to 15 years.

Based on the Income Tax Act 2025 for Tax Year 2026-27. Educational reference only — verify with a Chartered Accountant before filing.