Income Tax Act

Official PDF pages 51–55

SOURCE PDF PAGE 51
( A )   the service of the workman has been interrupted by such
transfer; or
( B )   the terms and conditions of service applicable to the work -
man after such transfer are in any way less favourable to the
workman than those applicable to him immediately before
such transfer; or
( C )   the new employer is, under the terms of such transfer or
otherwise, legally not liable to pay to the workman, in the
event of his retrenchment or compensation on the basis that
his service has been continuous and has not been interrupted
by such transfer;
( d )   in respect of the entries against serial numbers 10 and 11 thereof, the
expressions “employer” and “workman” shall have the same meanings
as respectively assigned to them in the Industrial Disputes Act, 1947
(14 of 1947);
( e )   the provisions of the entries against serial number 12 thereof shall be
subject to the following conditions:—
( i )   the applicable schemes of the said companies or authorities or
societies or Universities or the institutes referred to in clauses
( h )( vii ) and ( x ), governing the payment of such amount are made
as per such guidelines (including,   inter alia , criteria of economic
viability) as may be issued in this behalf;
( ii )   where deduction has been allowed to an employee in respect of the
said item for any tax year, no deduction thereunder shall be allowed
to him in relation to any other tax year; and
( iii )   where any relief under section 157 has been allowed to an
assessee for any tax year in respect of any amount referred to in the
said item, such amount shall not be allowed as a deduction from
the compensation received or receivable in any tax year;
( f )   in respect of the entries against serial number 14 thereof, if any payment
on account of cash equivalent of leave salary is received from one or
more than one employer in the same tax year (whether or not any such
payment or payments was or were received in any earlier tax year), the
aggregate amount of deduction shall not exceed—
A – B,
where,—
A = the limit specified by the Central Government, by notification; and
B = the aggregate amount of payment or payments which was
received in any one or more earlier tax years and allowed as an ex -
emption or a deduction (whether whole or part) from total income
of any such tax year or years;
( g )   the death- cum -retirement gratuity referred to in sub-section (1) (Table:
Sl. No. 3) shall be as—
( A )   received under the revised pension rules of the Central Government,
or the Central Civil Services (Pension) Rules, 2021; or
( B )   received under any similar scheme applicable—

──────────

SOURCE PDF PAGE 52
( i )   to the members of the civil services of the Union or holders
of posts connected with defence or of civil posts under the
Union (such members or holders being persons not governed
by the said rules);
( ii )   to the members of the all-India services;
( iii )   to the members of the civil services of a State or holders of
civil posts under a State; or
( iv )   to the employees of a local authority;
( h )   the schemes of voluntary retirement or termination of service as referred
to in sub-section (1) (Table: Sl. No. 12) shall be for the employees of—
( i )   a public sector company (under a scheme of voluntary separation);
or
( ii )   any other company; or
( iii )   an authority established under a Central Act or State Act or Pro -
vincial Act; or
( iv )   a local authority; or
( v )   a co-operative society; or
( vi )   a University established or incorporated by or under a Central Act
or State Act or Provincial Act and an institution declared to be a
University under section 3 of the University Grants Commission
Act, 1956 (3 of 1956); or
( vii )   an Indian Institute of Technology within the meaning of section
3( g ) of the Institutes of Technology Act, 1961 (59 of 1961); or
( viii )   the Central or any State Government; or
( ix )   an institution, having importance throughout India or in any State
or States, as the Central Government may, by notification, specify
in this behalf; or
( x )   such institute of management, as the Central Government may, by
notification, specify in this behalf.
C.—Income from house property
Income from house property.
20.   (1) The annual value of property consisting of any buildings or lands
appurtenant   thereto,   owned   by   the   assessee   shall   be   chargeable   to
income-tax under the head “Income from house property”.
(2) The provisions of sub-section (1) shall not apply to such portions of the property,
as the assessee may occupy for his business or profession, the profits of which are
chargeable to income-tax.
Determination of annual value.
21.   (1) For the purposes of section 20, the annual value of any property shall
be deemed to be the higher of the following:—

──────────

SOURCE PDF PAGE 53
( a )   the sum for which it might reasonably be expected to let from year to
year; or
( b )   the actual rent received or receivable by the owner, if the property or any
part of it is let.
(2) If the property or any part of it is let and was vacant for the whole or any part
of the tax year and owing to such vacancy the actual rent received or receivable by
the owner in respect thereof is less than the sum referred to in sub-section (1)( a ),
the annual value of such property shall be deemed to be the amount so received
or receivable.
(3) The annual value of the property shall be reduced by the taxes (including service
taxes) levied by a local authority in respect of such property, actually paid during
the tax year by the owner, irrespective of when such taxes became payable.
(4) The rent which cannot be realised by the owner shall not be included in computing
the actual rent received or receivable, subject to the rules as may be made in this
behalf.
(5) Where a property is held as stock-in-trade and is not let wholly or partly at any
time during the tax year, the annual value of such property or part thereof shall be
5
[ nil   up to ]   two years from the end of the financial year in which the certificate for
completion of construction is obtained from the competent authority.
(6) The annual value of the property consisting of a house or any part thereof shall
be taken as   nil , if the owner occupies it for his own residence or cannot actually
occupy it due to any reason.
(7) The provisions of sub-section (6)—
( a )   shall apply only in respect of two of such houses as specified by the
assessee in this behalf;
( b )   shall not apply, if the house or any part thereof is actually let during any
time of the tax year, or if the owner derives any other benefit from it.
Deductions from income from house property.
22.   (1) The income under the head “Income from house property” shall be
computed after making the following deductions:—
( a )   30% of the annual value as determined under section 21;
( b )   where the property has been acquired, constructed, repaired, renewed or
reconstructed with borrowed capital, the amount of any interest payable
on such capital;
( c )   where the capital referred to in clause ( b ) is borrowed during any period
prior to the tax year in which the property has been acquired or con -
structed, the amount of any interest payable for the said prior period
5.   Substituted for “ nil   for” by the Finance Act, 2026, w.e.f.   1-4-2026 .

──────────

SOURCE PDF PAGE 54
in five equal instalments for the said tax year and for each of the four
immediately succeeding tax years.
(2) In case of property or properties referred to in section 21(6), the aggregate amount
of deduction under  
6
[ sub-section (1)( b ) and ( c ) ]   shall not exceed—
( a )   `   200000, subject to the following conditions:—
( i )   the property has been acquired or constructed with borrowed capital
and such acquisition or construction is completed within five years
from the end of tax year in which capital was borrowed;
( ii )   the assessee furnishes a certificate from the person to whom interest
is payable on such capital; and
( b )   `   30000 in any other case.
(3) The deduction under section 22(1)( c ) shall be computed after reducing the interest
referred to in the said section by any amount already allowed as a deduction under
any other provisions of this Act.
(4) The certificate referred to in sub-section (2) shall specify—
( a )   the amount of interest payable on capital borrowed; and
( b )   the interest payable on any new loan, where subsequent to the capital
borrowed, the assessee has taken any such loan for repayment of whole
or any part of such capital.
(5) The aggregate of the amounts of deduction under sub-section (2) in   respect
of properties of the nature referred to in section 21(6) shall not exceed   `   200000.
(6) Any interest chargeable under this Act which is payable outside India shall not
be allowed as a deduction under this section, if—
( a )   tax has not been paid or deducted on such interest under   Chapter XIX-B;
and
( b )   in respect of such interest, there is no agent in India as per section 306.
Arrears of rent and unrealised rent received subsequently.
23.   (1) The amount of arrears of rent received by an assessee from a tenant,
or the unrealised rent realised subsequently from a tenant, shall be deemed to
be the income from house property in respect of the tax year in which such rent is
received or realised.
(2) The amount deemed to be income from house property under sub-section (1) shall
be included in the total income of the assessee under the head “Income from house
property”, whether the assessee is the owner of the property or not in that tax year.
(3) A sum equal to 30% of the arrears of rent or the unrealised rent referred to in
sub-section (1) shall be allowed as deduction.
6.   Substituted for “sub-section (1)( b )” by the Finance Act, 2026, w.e.f.   1-4-2026 .

──────────

SOURCE PDF PAGE 55
Property owned by co-owners.
24.   (1) For property co-owned with definite and ascertainable share, the
co-owners shall not be assessed as an association of persons and their
income computed separately under this Part as per their respective share shall be
included in their total income.
(2) The relief available under section 21(6) shall be provided as if each co-owner is
individually entitled to the said relief.
Interpretation.
25.   For the purposes of sections 20 to 24, the “owner” in relation to a property
or any part thereof shall include—
( a )   an individual who transfers without adequate consideration, any property
to the spouse (except under an agreement to live apart), or to a minor
child (other than a married daughter);
( b )   the holder of an impartible estate, and he shall be deemed to be an
individual owner in respect of all the properties comprised in the estate;
( c )   a member of a co-operative society, company or other association of
persons to whom a building or part thereof is allotted or leased under a
house building scheme of the society, company or association;
( d )   a person who is allowed to take or retain possession of any building or
part thereof in part performance of a contract of the nature referred to
in section 53A of the Transfer of Property Act, 1882 (4 of 1882);
( e )   a person who acquires any rights (excluding any rights by way of a lease
from month to month or for a period not exceeding one year) in or with
respect to any building or its part—
( i )   by virtue of transfer of such property by way of sale or exchange or
original or extendible lease for a term of not less than twelve years;
or
( ii )   accruing or arising from any transaction (whether by way of
becoming a member of, or acquiring shares in, a co-operative
society, company or other association of persons or by way of any
agreement or any arrangement of whatever nature), not being a
transaction by way of sale, exchange or lease which has the effect
of enabling the enjoyment of such property.
D.—Profits and gains of business or profession
Income under head “Profits and gains of business or profession”.
26.   (1)   The   incomes   referred   to   in   sub-section   (2)   shall   be   chargeable   to
income-tax under the head “Profits and gains of business or profession”.
(2) The income under sub-section (1) shall include—